With the recent credit crisis weakening the financial position of several banks world-over, the question that is being repeatedly posed is whether the boards of directors of these banks could have foreseen the oncoming crisis or whether they should have taken steps to forestall a slide in their financial position. Fingers are being pointed not only at the executive management of these banks, but...
CSX/TCI Judgment – Some Thoughts on the SEBI Takeover Regulations
In a closely followed case, the U.S. District Court for the Southern District of New York issued its decision regarding the reporting requirements of a hedge fund (TCI) that had entered into “total return equity swaps” with counterparties in respect of the shares of CSX. Although TCI only entered into cash-settled swaps (without any obligations to obtain delivery of CSX’s shares), the...
Some Lessons from Bear Stearns
The New York Times DealProfessor has a column Burying Bear Stearns that highlights the takeaways from the Bear Stearns saga, which incidentally are matters we often endeavour to stress on this blog. They are:
– Moral hazard– Systemic risk– Corporate governance
Training Directors
I had earlier posted about the Chartered Director test prescribed by the Institute of Directors in London, which is a qualifying examination for directors on corporate boards. In response, one our readers from Australia, Susie Reece Jones, has been kind enough to provide us with some details about the situation in Australia in this regard. In Australia, there is almost a de facto pre-requisite...
An Examination for Directors
A few weeks ago, we carried a post by Pramod Rao discussing the implications of recent changes to Clause 49 of the listing agreement, the key ones being strengthening the role of the independent directors on boards of Indian listed companies. Although relegated only to a non-mandatory provision, one of the changes states that a “company may ensure that the person who is being appointed as an...
Micro..hoo: A New Twist
This new development on the international M&A front is worth briefly noting on this blog. We had all expected to see a highly-contested battle for control of Yahoo! panning out over the next few months. A hostile bid by Microsoft was keenly on the cards. But, it all ended last weekend turning out to be a damp squib, with CEO Steve Ballmer announcing Microsoft intention of withdrawing from the...
Corporate Governance & Enforcement
The corporate governance norms prescribed by SEBI were tightened earlier this month (as discussed here), whereby the requirement of independence of directors has been made more stringent. However, it is disheartening to note that while there is a move by the regulator to enhance mandatory norms on corporate governance at a substantive level, there is a lot still left to be desired when it comes...
Disclosure Norms for Law Firms
So far, public listings of securities by law firms has not caught on despite the first law firm (Australia’s Slater & Gordon) listing about a year ago. The legal practice regulations in most jurisdictions do not permit law firms to either take a corporate form or to issue its securities to the public. But, if law firms are permitted to go public, and indeed if they do so, they would be...
Fairness Opinions: Art or Science?
It has been said that valuation of a company is more of an art than a science. This has manifested again in the Bear Stearns transaction that is currently hogging limelight among legal circles. In this case, Lazard issued a fairness opinion when JP Morgan’s transaction with Bear Stearns was first announced that a stock consideration of $2 per share was fair to Bear’s shareholders. Now, under the...
Bear Stearns: Some Legal Complications
JP Morgan Chase yesterday increased its bid for Bear Stearns to $10 per share from its previous bid of $2, fearing a refusal by shareholders to approve its takeover of the beleaguered broking entity. Several large shareholders of Bear Stearns had expressed disappointment at the initial offer price put out by JP Morgan Chase. As the takeover battle progresses, some complications seems to have...
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