It is common practice for loan agreements to provide for a fee/ premium where a loan is repaid earlier than its contractual due date. The said fee is designed to compensate the lender/s for the loss of anticipated income from the transaction and is usually expressed as a percentage of the principal amount prepaid. While the loan agreement sets out the circumstances in which the prepayment fee...
Ostensible Authority and Estoppel
The Privy Council in Kelly v. Fraser, [2012] UKPC 25, recently revisited the issue of whether an agent can be said to have ostensible authority on the basis of his own representations. Mr. Fraser, the Respondent, became the CEO of Island Life Insurance Company on 1st February, 2000, and shortly after that became a member of the Salaried Staff Pension Plan (“SSP”) of the company. The SSP was...
The LIBOR Crisis and Corporate Governance
Whenever a corporate crisis erupts (a phenomenon all so common these days), questions quickly emerge regarding the role of governance (or failure thereof) at the companies involved. On a similar note, questions are being raised regarding the failure of board oversight, risk management systems and internal controls at banks such as Barclays that failed to curb manipulation in “fixing” the LIBOR...
Shareholder Power: Say-on-Pay
Recent Developments in the US: Dodd Frank Act, section 951, requires companies to approach shareholders for their non-binding vote on executive compensation and golden parachutes. Recent Developments in the UK: A new proposal would require companies to approach their shareholders for a binding vote on executive pay. Existing Position in India: Managerial remuneration has been historically...
Insider Trading Enforcement
Rajat Gupta’s conviction by a New York court for insider trading has sparked off a debate about the state of insider trading enforcement in India. While several cases have been pursued by SEBI in the last two decades since insider trading has been prohibited by regulation, the rate of successful convictions or regulatory sanctions has been minimal. An editorial in the Business Standard states...
Delaware Courts Allow Litigation to Move at the Speed of Business
[The following post comes to us from Andrea Tinianow, who is a vice president and assistant general counsel at Corporation Service Company. She is also a Delaware attorney. This post relates to the Delaware Supreme Court’s decision upholding the Chancery Court in Martin Marietta Materials inc. v. Vulcan Materials, Inc. We had earlier discussed some of the substantive aspects of the Chancery...
The Concept of Control under the Indian Competition Act: an analysis (Part II)
(This is a continuation of a post contributed by Avirup Bose) In an earlier post I discussed the importance of understanding the concept of ‘control’ while analyzing the probable anti-competitive effects of a merger especially in a partial stock ownership context. The discussion was in the background of an order of the CCI dated May 17, 2012, which basically held that if a company has a...
The Concept of Control under the Indian Competition Act: an analysis (Part I)
(The following post is contributed by Avirup Bose, who holds law degrees from the West Bengal National University of Juridical Sciences and the Harvard Law School and is qualified to practice law in India and the U.S. Avirup has worked in the New York office of Weil Gotshal & Manges and in the New Delhi office of S&R Associates. He has also briefly worked at the Mumbai office of Trilegal...
JP Morgan’s Trading Losses: Regulation and Governance
There has been a great deal of debate surrounding JP Morgan’s hedging losses announced last week. There is some mystery surrounding the nature of the transactions involved, without full clarity yet on the amount of losses. Andrew Ross Sorkin has a brief explanation of the episode in the New York Times: … Here’s an overly simplistic primer, but you’ll probably get the idea: The company’s...
Confidentiality Agreements in M&A Transactions: Lessons from Delaware
Background Amongst legal documents in an M&A transaction, the confidentiality agreement plays an important role, as it does in other types of investment transactions (such as private equity), especially when it involves a public listed company. There are two key aspects of interest in any confidentiality agreement, which are also often the bone of contention in negotiations: (i) the scope of...
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