SEBI Clears Air Over Remuneration to Promoter-Executive Director

Gaurav Pingle, Practising Company Secretary

Remuneration or compensation to the directors of the company is one of the crucial aspects of corporate governance. The amount of remuneration or increase in the remuneration to directors is usually based on the profitability of the company and its performance for the corresponding financial year. By the amendments introduced by the Companies (Amendment) Act, 2019 and the Companies (Amendment) Act, 2020, the provisions relating to remuneration to non-executive directors / independent directors have been amended. Remuneration to promoter directors (executive directors or managing directors) has always been a matter of discussion.

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Representation and Warranties Insurance & Need for Establishing a Legal Framework in India

Avijit Singh and Chetan Saxena

Introduction

With the advent of Covid-19 nothing has been left untouched, from a daily household routine to critical market avenues, it has brought new challenges for everyone. However, with these new challenges, various new opportunities have popped up, especially for India. In terms of legal landscape, various novel legal concepts can be introduced in India (already existing in the west) on a much wider scale that can reap benefits. An important domain is the scheme of Representation and Warranties Insurance (“RWI”) in M&A transactions. While Representations and Warranties (together “R&W”) has been an important component of M&A dealings, the introduction of insurance has brought concerns along with multiple benefits. RWI is in its initial phase in India; contrary to the position in the west which has a much wider application and understanding of the concept.

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Poison Pill: A Vaccine for Hostile Takeovers in India?

Aastha Agarwalla and Lavanya Gupta

Prefatory

The coronavirus outbreak has undisputedly pushed corporate entities to vulnerable positions wherein entities have become attractive targets for hostile acquisitions because of the plummeted stock prices. This tension has spurred debates across the globe, including India, on tactical strategies that should be adopted by potential target-entities to thwart such hostile takeovers. There are several anti-takeover strategies, inter-alia, shark-repellant, golden-parachute, staggered-board; however, amongst others, the ‘poison pill strategy’ is being advocated as a successful mechanism to combat hostile takeovers. Many US companies have recently resorted to poison pills, including Hexcel Corp, Woodward Inc., etc. 

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STRENGTHENING BOARDS THROUGH DIVERSITY – A TWO-SIDED MARKET THAT CAN BE EFFECTIVELY SERVICED BY INTERMEDIARIES

Akshaya Kamalnath, Lecturer, Auckland University of Technology

The current focus on the monitoring role of the board has come under much criticism. Independent directors play a significant role in this model. However, their ability to truly function independently has been rightly questioned in the last decade. Independent directors are impeded by two main problems: lack of access to relevant information, for which they are reliant on management; and the high likelihood of being captured (to varying degrees) by management. There have been various suggestions to fix these problems, ranging from enhancing board diversity to drastically reforming the current model of corporate boards.

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CORPORATE GENDER DIVERSITY IN INDIA – LOOKING BEYOND THE BOARD

Dr. Akshaya Kamalnath, Lecturer Auckland University of Technology

India’s regulatory intervention with regard to corporate diversity has focused exclusively on board gender diversity. It has required companies to have atleast one woman on its board. The relevant section of the Companies Act, 2013 is extracted below:

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