RBI/2008-09/ RBI/2008-09/ The Asian Journal of Comparative Law has just published an interesting article that compares foreign direct investment (FDI) and venture capital investment in the two Asian economic giants. In Unraveling the Puzzle of Differing Rates of FDI and FVCI in India and China the authors Haitian Lu, Hong Huang and Swati Deva find that when it comes to FDI, China scores better...
Spiralling Effects of the Financial Crisis
(The global financial crisis is now at a stage where the debate is transcending from one of decline in bottomlines of companies, falls in stock markets, tightening of credit and the like to wider issues that have greater social ramifications. If these issues are not dealt with appropriately, it could lead to disastrous consequences. In this behalf, one our readers Courtney Phillips sends us the...
SEC Proposals to Curb Short Selling
Who Shall Govern? CEO/Board Power, Demographic Similarity, and New Director Selection The U.S. SEC earlier this week announced a set of proposals to curb short selling. One the one hand, it is argued by proponents of short selling (primarily institutional investors such as hedge funds) that such activity helps contribute to market efficiency. On the other hand, opponents of the idea (primarily...
The AIG Bonus Payments Controversy: Issues of Contract Law
There has been a significant outrage since the controversy over bonus payments to some AIG employees began about a week ago. One of the justifications of the AIG management for pressing on with the payments is that the company is legally obligated to pay their employees failing which it could be liable to suits for breach of contract. Although the controversy has taken a different shape owing to...
A Resurgence of Bank Nationalisations
An offshoot of the global financial crisis has been the significant changes in economic policies in the developed world. The recent phenomenon relates to increasing calls from leading economists to nationalise troubled banks, particularly in the U.S. The concept of nationalisation was previously associated with the so-called ‘socialist’ economies, but is now becoming closer to reality even with...
Lessons for Financial Sector Regulation
Lloyd Blankfein, the chief executive of Goldman Sachs, offers his explanation of the things that went wrong in the financial services sector which resulted in contagion and the global financial crisis. In his column in the Financial Times, Blankfein outlines the failings and the lessons from the crisis: – risk management should not be predicated on historic data;– outsourcing of risk...
Sentences in China’s Sanlu Milk Case
Speaking of corporate crimes, this news report in Caijing states that death sentences have been awarded by an Intermediate Court to three persons and life imprisonment for one in the contaminated milk case. This comes within mere 4 months of the scandal that unfolded in September last year. While criminal punishment will certainly serve as a deterrent, questions have been raised at the...
The grounds for lifting the Corporate Veil
In an earlier post, I looked at a recent judgment of the England and Wales High Court by Justice Munby in Hashem v. Shayif. It appears from the judgment that the only case in which the corporate veil could be lifted was where the company was a façade. In order to support this conclusion, Justice Munby relied on several cases, but most prominently on the decision of the Court of Appeals in Adams v...
British decision on lifting the corporate veil: Clarity or more confusion?
Considerable difficulty arises in trying to find a coherent set of principles to govern issues related to ‘lifting the corporate veil’. Courts have relied upon several factors in deciding whether to ignore the existence of the corporate entity – ‘fraud’ or ‘sham’, ‘single economic entity’, ‘agency’, ‘tax evasion’, ‘determination of nationality’ etc. In the early 1990s, in a landmark...
Nationalisation of Large Corporations
An interesting column in the Economic Times by Swaminathan S. Anklesaria Aiyar looks at the biggest government takeovers in history: “Socialists, like Hugo Chavez in Venezuela or Indira Gandhi in India, are famous for nationalising the biggest corporations. But the US government has taken over three of its biggest corporations within two weeks. Has the US turned socialist? American right-wingers...
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