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.

Continue reading “SEBI Clears Air Over Remuneration to Promoter-Executive Director”

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. 

Continue reading “Poison Pill: A Vaccine for Hostile Takeovers in India?”

Structuring Distressed M&A Deals: Regulating the Unregulated Opportunistic Behaviour

Tanuj Agarwal, Institute of Law, Nirma University, Ahmedabad

All intelligent investing is value investing, acquiring more that you are paying for.

-Charlie Munger

(Vice-Chairman, Berkshire Hathaway)

Merger & Acquisition (M&A) deals have witnessed robust challenges, firmly because of financial distress posed due to the Covid-19 outbreak. Where the companies have observed their all-time high valuations and market capitalisation in a momentous bull market, the Covid-19 pandemic has led to the deterioration of the commercial activities and financial market to a great extent. Many desirable and credit-worthy companies are unable to discharge their financial obligation owing to the economic fallout. This will surge the M&A activity in these financially distressed companies.

Continue reading “Structuring Distressed M&A Deals: Regulating the Unregulated Opportunistic Behaviour”

Disclosure Regime: SAT lays down parameters for timely disclosures

Gaurav Pingle, Practising Company Secretary and Renucka Vaiddya, Research Associate, Gaurav Pingle & Associates

The ‘Principles Governing Disclosures and Obligations of Listed Entity’ have been prescribed in Chapter II, Regulation 4 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. According to the provisions, a listed entity shall provide adequate and timely information to recognized stock exchange(s) and investors. However, what is adequate information is not very easy to determine and prescribe. It is very subjective – depending upon the nature of the transaction, the volume of transaction, and the company. Further, the Regulations provide that a listed entity shall refrain from misrepresentation and ensure that the information provided to recognized stock exchange(s) and investors is not misleading. A listed entity shall make the specified disclosures and follow its obligations in letter and spirit taking into consideration the interest of all stakeholders. The listed entity is also under an obligation to abide by all the provisions of the applicable laws including the securities laws and also such other guidelines as may be issued from time to time by SEBI and the recognised stock exchange(s) in this regard and as may be applicable.

Continue reading “Disclosure Regime: SAT lays down parameters for timely disclosures”