The issue of board diversity has acquired considerable prominence in recent times. Although there can be various hues to the concept of diversity, one manifestation relates to gender diversity and the requirement for women directors on corporate boards. What began as a useful management strategy has acquired regulatory overtones. Several countries have incorporated gender diversity into their...
A Radical Idea for Restructuring Corporate Boards
Last week’s Schumpeter column in the Economist carries a provocative idea that involves a complete relook at the way boards of companies are structured and operated. It borrows a proposal from an article titled “Boards-R-Us: Reconceptualizing Corporate Boards” authored by two leading US corporate law academics. The column summarizes the proposal as follows: In the May edition of the Stanford Law...
Reverse Break Fees on Indian Transactions
Background; Concept Internationally, in negotiated mergers & acquisitions (M&A) transactions, it is customary to incorporate various types of deal protection devices in order to guard against a scenario where the deal falls through before it is completed and parties have in the meanwhile invested significant time and incurred costs. Two such deal protection devices that operate almost...
Comparative Paper on M&A: Transaction Structures, Law & Practice
Professor John Coates has a new paper titled Mergers, Acquisitions and Restructuring: Types, Regulation, and Patterns of Practice that is available on SSRN. The abstract is as follows: An important component of corporate governance is the regulation of significant transactions – mergers, acquisitions, and restructuring. This paper (a chapter in Oxford Handbook on Corporate Law and Governance...
“Inversion” Takeovers
Standard treatises on mergers & acquisitions (M&A) contain the usual benefits or rationale for why a company would take over another. These include growth, size, synergies, and so on. One of the significant benefits of takeovers could also be tax synergies such as setting off the losses of one company against the losses of another. Similar benefits may be available with respect to...
US Supreme Court Decision on Securities Fraud Actions
The US Supreme Court yesterday issued its opinion in a significant case that determines the state of the law on class actions for securities fraud. The background and the issue in question have been set out in the ruling as follows: Investors can recover damages in a private securities fraud action only if they prove that they relied on the defendant’s misrepresentation in deciding to buy or sell...
Delaware Standard for Controlled Company Mergers
Delaware courts have long been considering disputes pertaining to mergers between companies and their controlling shareholders. Not only do such mergers involve related party transactions but they are also used as a means to squeeze out the minority shareholders of the target who are cashed out as part of the merger. In one of the first decisions that permitted minority shareholders to bring...
Rajat Gupta Insider Trading Case: Appellate Decision
Last week, the United States Court of Appeals for the Second Circuit issued its opinion in United States of America v. Rajat K. Gupta, in which it upheld all the findings of the district court convicting Rajat Gupta on various counts of securities fraud. Although several questions were raised in the appeal relating to the robustness of the evidence in support of the conviction, the appellate...
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...
Guest Post: Rights of MBS Bondholders Against the Company: Part 2
[The following post is contributed by Nidhi Bothra of Vinod Kothari & Company. The author may be contacted at [email protected] This is continuation of a previous post accessible here] Does a trust put complete cloak over the identity of beneficiaries? In the several rulings discussed in the preivous post, the privity of contract between the bondholders / debenture holders has been put...
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