Tag: International Developments
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SEC Proposals to Curb Short Selling
[Posted by Umakanth Varottil] 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…
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The AIG Bonus Payments Controversy: Issues of Contract Law
[Posted by Umakanth Varottil] 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…
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A Resurgence of Bank Nationalisations
[Posted by Umakanth Varottil] 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…
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Lessons for Financial Sector Regulation
[Posted by Umakanth Varottil] 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…
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Sentences in China’s Sanlu Milk Case
[Posted by Umakanth Varottil] 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…
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The grounds for lifting the Corporate Veil
[Posted by Mihir Naniwadekar] 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…
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British decision on lifting the corporate veil: Clarity or more confusion?
[Posted by Mihir Naniwadekar] 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’…
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Nationalisation of Large Corporations
[Posted by Umakanth Varottil] 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…
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History Repeats Itself: Whither Governance? (Part 3)
[Posted by Umakanth Varottil] In two previous posts (here and here), we discussed the several corporate governance issues that have been accentuated on account of the current financial turmoil emanating from the U.S. In this post, we examine some of the differences between corporate structures and governance in the U.S. and India. In India, companies…
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History Repeats Itself: Whither Governance? (Part 2)
[Posted by Umakanth Varottil] In the background of the boardroom failures discussed in the previous post, it is useful to explore some of the factors involving U.S. corporate governance that may have led to this situation. 1. Dispersed Shareholding and Lack of Oversight One of the key problems involving a dispersed shareholding model (that is…