Equity Crowdfunding in India – Some Lessons from Australia and New Zealand

Akshaya Kamalnath, Lecturer, Auckland University of Technology

Introduction

How would you like to hold a small stake in an innovative start-up? With the space industry being opened up to the public sector for instance, once could imagine holding a stake, however small, in a company in that sector. Presumably enthusiasts would want to invest in such a company, not with the hope of profits, but rather, to be part of the story of a company that does something they find interesting. Equity crowdfunding allows the ordinary person to do this. Equity crowdfunding also allows start-ups to find an alternative funding source.

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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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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.

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‘Public Policy’ – Whether a twinkling defence against enforcement of a foreign arbitral award?

Pareekshit Bishnoi, Advocate, High Court of Delhi

The Arbitral tribunal & Courts are the two engines of any arbitral proceedings. They, depending on the stage, pull the arbitral process until an arbitral award is enforced. The role of the courts in this process is restricted to mere supervision and not intervention. However, what is supervision and what is an intervention of a court has had different latitudes across the jurisdictions.

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Minimal Court Intervention and Arbitrator’s Discretion to Grant Interim Orders

Advocate Meenal Garg, Punjab & Haryana High Court

The Arbitration and Conciliation Act, 1996 (hereinafter “the Act”) empowers both the court as well as the arbitral tribunal to grant interim protection to an aggrieved party under Sec. 9 and 17 of the Act respectively. A comparison of these two provisions read along with other provisions of the Act reveals the following differences:

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Line of Difference: Letter of Comfort and Contract of Guarantee

Yash Tripathi, Associate at Pioneer Legal, Mumbai

Concepts

In an event of default in repayment of the debt, invoking a guarantee is always the priority of the lenders. However, it should also be looked thoroughly whether a document serves as a contract of guarantee or not. In the recent decision of Yes Bank Ltd. v. Zee Entertainment Enterprises Ltd. &Ors.[1], Bombay HC draws the line of difference between a letter of comfort (“LOC”) and a contract of guarantee.

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Extension of suspension of CIRP for another three months: Death Blow to Insolvency Regime

Priyanka Jaiswal, a final year student at NUSRL Ranchi

Prelude

After the announcement of the nation-wide lockdown, an ordinance was promulgated which stated that no insolvency proceedings can be initiated by either the corporate debtor or any of its financial creditors for defaults arising during the six months beginning on March 25. The six months’ timeline for the suspension came to an end on September 25 and it is noteworthy to note that the Insolvency and Bankruptcy Code (Second Amendment) Act, 2020 was passed from both the houses and received Presidential assent on September 23, 2020. In exercise of the powers conferred by section 10A of the amended code, the Central Government extended the suspension and curtailed the operation of Section 7, 9, and 10 of the Code for all defaults occurring on or after 25th March 2020 for a period of six months plus three months now. Though these changes have been introduced with the motive to give companies breathing time to recover from the distress and to keep them as a going concern but there are some material shortcomings which may worsen the situation even further.

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Enforcement of Foreign Awards: “Pro Enforcement Bias”, Need of the Hour

Tariq khan and Aastha Agarwalla

The Indian arbitration law regime has seen many developments since the last decade; predominantly the alignment of ‘enforcement of foreign awards’ framework with the principles of United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York Convention). Despite the calibrated efforts, India is still perceived as a hostile jurisdiction to enforce foreign awards, precisely due to the repulsive recourse adopted by the Indian courts. In particular, the Supreme Court of India (SC) and the High Courts, in its decisional practice by various judgments, inter-alia, NAFED vs. Alimenta S.A. (NAFED Judgment), Venture Global Engineering LLC vs. Tech Mahindra, is testament to this fact.

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“Stamping Out” Double Taxation in Mergers &Acquisitions (M&As)

Pranav Bafna and CA Priyanshi Chokshi

Context

The Covid-19 pandemic has hemorrhaged balance sheets of business organizations across the board. As money continues to bleed out, limiting the cash outflow is essential to ensure that businesses continue to survive. Alas, a surgical operation on the wounded balance sheet is a must. In this regard, Corporate Restructuring is one of the best tools in the hands of financial doctors to revive a struggling entity.

Undoubtedly, with Corporate Restructuring at the forefront of this battle, M&A’s could be a knight in the shining armor. In this regard, the knight’s armory does have a few chinks, which could stall its progression – Yes, we are referring to “Taxes”.

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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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