Information Filled Under 'Practicing Law in India' Category
Enforcement of Corporate Governance Norms: Anecdotal Evidence Wednesday, May 26th, 2010
A constant quibble with corporate governance in India is that while the body of substantive norms has been ballooning over time, the enforcement of those norms has not kept pace. In a somewhat unusual measure, the National Stock Exchange (NSE) has threatened to suspend trading of a listed company for failure to file governance reports as required under the listing agreement. As the Business Standard notes : There are some 1,300 listed companies on exchanges, according to information available on the public domain, that have not complied with the listing agreement or on corporate governance issues and they have been suspended
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Enforcement of Corporate Governance Norms: Anecdotal Evidence
Section 86(a)(ii) of the Companies Act, 1956 as well as the Companies (Issue of Share Capital and Differential Voting Rights) Rules, 2001 permit the issue of shares with differential rights as to voting and dividend (DVRs) by companies, subject to certain conditions. Such issue of shares with DVRs has also been implicitly blessed by the Company Law Tribunal in Anand Pershad Jaiswal v. Jagatjit Industries Limited , MANU/CL/0002/2009.
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Interpretive Guidance: Differential Rights on Shares
On Friday, I completed a two week coaching session on presentations with How to Give a Remarkable Presentation. I want to follow up and share how you can practice to get better at public speaking. Many of you are very authentic and comfortable when meeting one-on-one and with a small group
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Want to be a Better Speaker? Practice, Practice, Practice
The last week has witnessed tighter financial regulations emerging out of the U.S. and European markets. While some of the reforms are expected to result in migration of investments into more liberal markets in Asia (including India), others represent introduction of stringent measures that are already in place in India
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The Impact of Tightening Financial Regulation
After making a proposal nearly two years ago for the establishment of a separate stock exchange for small and medium enterprises (SMEs) to enable them to access the capital markets, SEBI has recently established the legal framework for achieving the same either through promotion of dedicated exchanges and/or dedicated platforms of the exchanges for listing and trading of securities issued by SME. SEBI has taken the following steps: 1. Introduced Chapter XA in the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 which deals with issue of specified securities by SMEs; 2.
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Framework for SME Exchange
With the rapid growth of group companies in India over the past decade, it has become commonplace for a commercial transaction to be routed through several entities in one group. In cases where some of those entities have entered into agreements containing an arbitration clause, and others have not, the question arises as to whether the non-signatories are bound by the arbitration clause.
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The Corporate Veil and Arbitration Clauses
The issue of applicability of stamp duty to a scheme of arrangement (merger/ amalgamation, demerger, reconstruction or otherwise) effected with the sanction of the High Court under sections 391 to 394 of the Companies Act, 1956 has always been a vexed one. As regards stamp duty legislation more generally, several states have enacted their own stamp duty laws while the remaining states are governed by the Indian Stamp Act, 1899
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Proposal for Streamlining Stamp Duty on Mergers, etc.
(In the following post, Rohan Bagai analyzes the regulations relating to ‘sweat equity’ under Indian company law in the light of recent events surrounding the Indian Premier League. Rohan is a corporate lawyer at one of the leading law firms in India. He holds a Master of Laws (LL.M.) degree from New York University School of Law (NYU), New York with a specialization in corporate laws) The recent Indian Premier League (IPL) brouhaha has triggered off an avalanche of hype and muckraking.
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‘Sweat Equity’ vs. ‘Sweet Equity’ – a Legal Perspective
The Reserve Bank of India has issued a circular bringing external commercial borrowings (ECBs) by designated Infrastructure Finance Companies (IFCs) within the automatic route subject to certain limits. The relevant portion of the circular is extracted below: On a review of the policy, it has been decided to modify the extant ECB policy in respect of the Infrastructure Finance Companies (IFCs) i.e. Non Banking Financial Companies (NBFCs) categorised as IFCs by the Reserve Bank
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ECB Process for Infrastructure Finance Eased
In his column in the Business Standard, guest contributor Somasekhar Sundaresan analyzes a recent judgment of the Bombay High Court that establishes the superiority of the nomination process over succession (whether testamentary or otherwise) in respect of shares of a company. He observes: The law on nomination of shares held in companies has taken a new meaning with perhaps the first interpretation of the provisions governing nomination in the Companies Act, 1956 by the Bombay high court. Interpreting Section 109A of the Companies Act, the court has ruled that the rights of a nominee to shares of a company would override the rights of heirs to whom property may be bequeathed.
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Nomination vs. Succession on Shares
Last week Nancy and I were in Los Angeles and we stayed at my favorite hotel The Peninsula Beverly Hills . It is probably one of the more expensive hotels in the area, but I am willing to pay more because the service is far superior. The rooms are nice, the mattress and pillows are nice, but it is the service that brings me back each time
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5 Reasons Law Firms Are Not Providing Extraordinary Service
I recently reviewed several law firm Web sites for their sections on client service. Almost without exception, law firms claimed to provide value to their clients, understand their clients’ needs, and deliver high-quality, cost-effective, and responsive services
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One Sure Way to Stand Out in the Crowd: Provide Better Service
A previous post outlined the issues that arose in the Reliance judgment and summarised the Court’s conclusions. In this post, I discuss two of these in more detail – the doctrine of identification, and the binding nature of an MoU under the Companies Act, 1956. As to the first issue, it was argued by RNRL that the MoU signed by the Ambani brothers was binding on their respective companies, by virtue of the doctrine of “identification”.
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The Supreme Court’s Judgment in the Reliance Dispute – Part II
We have discussed the role of the Debt Recovery Tribunal on this blog, and noted the Supreme Court’s decision in Nahar holding that an “independent suit” filed by a borrower is maintainable in civil court, despite the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“RDB Act”). This Monday (May 3), the Supreme Court considered another crucial issue in this context – the meaning of a “debt” and the range of disputes the Debt Recovery Tribunal has jurisdiction over.
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The Meaning of a "Debt"
(In his previous post , Tanmay Amar examined the new base pricing norms for issue of securities by Indian companies to non-resident investors. He now follows it up with an analysis of the new RBI circular, which is hot off the press, that amends pricing norms for transfers of securities between a resident investor and a non-resident investor) Introduction This post discusses the revised guidelines issued by the RBI, vide A.P
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Changes to Minimum Pricing Norms for Transfers of Indian Securities
An issue discussed repeatedly in commercial circles is the dilemma between the ethical arguments against corruption, and the commercial arguments in favour of ‘efficient grease’. This dilemma is particularly felt when facing bureaucratic bottlenecks in countries like India (the ‘when in Rome’ argument)
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Commercial Arguments against Corruption
(The following post is from Tanmay Amar , senior associate at Luthra & Luthra. Tanmay discusses a significant change to the minimum pricing norms for issue of shares by Indian companies to foreign investors. This change is bound to affect the manner in which valuations are to be arrived at, especially for investments by financial investors such as private equity funds.
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Changes to Minimum Pricing Norms for FDI in Unlisted Companies
(In the following post, Abhishek Tripathi , an independent legal practitioner, and Mani Gupta , an Associate at Luthra & Luthra examine some complexities in the regulations pertaining to FDI in trusts) The recently notified Consolidated FDI Policy of the Government of India (“ FDI Policy ”), in para 3.3.3, prescribes that ‘ FDI in Trusts other than VCF is not permitted .’ This is an insertion that was hitherto non-existent in the various press notes of the Government of India governing foreign direct investment (“FDI”). This assertion of (presumably) an existing prohibition raises some fundamental questions on the legal and regulatory treatment of various forms of contributions in trusts.
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FDI in Trusts
The Ministry of Law and Justice has recently released a Consultation Paper on Arbitration on ‘Proposed Amendments to the Arbitration & Conciliation Act, 1996’. We would like to thank Mr. Bhushan Shah for bringing this to our attention
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Proposed changes in India’s arbitration law: Part I
I go to a Starbucks here in Dallas where the people who work there remember my name, know what I usually order, know I am married to Nancy and that she plays golf, know that I am a Virginia Tech grad and I frequently go back to games and know that I work with lawyers.
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One Must Have Skill to Get Business: You Have to Remember Names
(The following post has been contributed by Vijay Kumar , a lawyer and a company secretary by qualification, who is practising as an Advocate in the Chennai High Court with the law firm of Iyer and Thomas) Non – Banking Finance Companies have been classified as a. Asset Finance Company b.
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Core Investment Companies – Draft RBI Guidelines
The ULIPs SEBI/IRDA tussle takes new turns practically every week and would not warrant further posts to my last one , (which was also followed by another post by a learned contributor) till either the Court decides the issue or the law is amended. However, I stumbled across a recent decision of the Delhi High Court (Chanchal Jain vs. SEBI (95 SCL 31 (2009)) dated July 24, 2009) on a related matter that is worth a quick mention here for several reasons
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The ULIPs controversy and a Delhi High Court decision
We have extensively discussed issues around tax avoidance previously; and one of the questions in this regard is the exact relationship between the 5-Judge Bench decision in McDowell and the subsequent 2-Judge Bench decision Azadi . To briefly recapitulate, in McDowell , Justice Chinappa Reddy took a strong stance against tax avoidance and effectively equated avoidance with evasion.
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Porrits & Spencer: Form over Substance Reaffirmed
In a decision last delivered last month, the Bombay High Court once again visited the debate over the meaning of ‘sale’, in the process of clarifying the scope of the obligation to deduct tax at source under section 194C of the Income Tax Act. The factual matrix before the Court involved a unique business model adopted by pharmaceutical companies
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Meaning of ‘work’ under section 194C
On several occasions, discussions on this Blog have pointed to the inadequacy of shareholder activism (spearheaded by institutional investors) in India, and have therefore called for greater participation of institutional investors in governance processes.
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Mutual Funds as Activist Investors
On March 8, 2010, SEBI passed an order in the case of Bank of Rajasthan (BoR). SEBI commenced investigation into the shareholding pattern of BoR following a reference received from the Reserve Bank of India (RBI). Pursuant to the RBI Guidelines on Ownership and Governance in Private Sector Banks dated February 28, 2005, the promoters of BoR were required to reduce their shareholding in the company
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SEBI Order on Shareholding Disclosures
Over the next few weeks I will be presenting two programs on client development for associates in a large firm and a program for Dallas Bar Association young lawyers. Among many things, I will tell the associates and young lawyers that they are never too young to begin working on becoming a “go to’ lawyer
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You are Never too Young to Become a "Go To" Lawyer