By Rishi Raj, Student at MNLU Aurangabad
The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “Code”) serves two purposes: (i) saves the business that is viable; and (ii) facilitates the exit of those that are not viable. The rescue mechanism is achieved through a Corporate Insolvency Resolution Process (CIRP) under Part II of the Code, and the exit mechanism is dealt through a liquidation process under Part III of the Code.
Continue reading “Interplay Between the Companies Act and IBC: A Positive or Negative Impact on Liquidation Process?”
By Aryan Sharma and Sakshi Agarwal, Students at Institute of Law (Nirma University)
The Reflective loss rule bars or disables the claim brought by shareholders for any personal loss suffered by him due to diminution in the market value of his shares or diminution in dividend because of “loss” in the company, or diminution in value of net assets of the company, and such claim is barred because the “loss” is merely “reflective” of the loss suffered by the company. The origin of this rule can be traced to the case of Foss v. Harbottle, wherein the UK Court of Chancery held that whenever an actionable wrong is done to the company, then only the company can bring a claim as a “proper plaintiff”.
Continue reading “Tracking the Reflective Loss Rule and Its Implications in Various Jurisdictions”
By CS Anisha Raheja
The pandemic of Coronavirus (Covid-19) has affected, directly or indirectly, the lives and operations of human beings and entities alike. On one hand, Covid-19 has endangered the life and health of people; on the other hand, it has given rise to unprecedented challenges for business leaders worldwide. The restrictions imposed by governments of many countries, for curbing the spread of the Covid-19, has confronted the business leaders with significant challenges for carrying out the business activities. At the same time, the landscape of corporate governance has evolved with various changes in rules and regulations or relaxations introduced on account of the Covid-19 pandemic. The effects of the Covid-19 on governance would be different in countries across the globe.
Continue reading “Time to Pause – Rethink – Restart Corporate Governance Practices”
Anisha Sarkar, Student at SNDT Women’s University Law School
The primary advantages of integration of Indian securities market with the global capital market are two-fold— firstly, it offers companies alternative jurisdictions, beyond their domestic sphere, to raise capital, garner a global presence in the world economy and access sophisticated market participants; secondly, it creates a geographically diversified investment portfolio for investors across the globe that enables the mitigation of systematic investment risks. While the outcome of such internationalization is favorable, it presents a series of legal challenges, hence thrusting the herculean task of framing regulations upon the financial regulatory authorities, that provide liberty to Indian companies to list their stocks across jurisdictions without compromising on the country’s domestic interests.
Continue reading “India’s Bid Towards the Revival of Equity Overseas Listing”
By Sourav Paul, Student at National University of Juridical Sciences
Over the past few years, there has been a revival of Special Purpose Acquisition Companies [“SPAC”] in the international capital markets paradigm. As per SPAC Insider data, since 2009, out of 755 such Initial Public Offerings [“IPO”] by SPACs, 248 happened in 2020 and 281 in 2021 to date. The gross proceeds raised by SPACs in 2020 amounted to over $83 billion, whereas in 2021, it amounted to $91.65 billion as of now. In 2020, around $80 billion was raised in the US by 247 SPACs representing almost 50% of the raised capital of about $174 billion. This resurgence of SPACs can be attributed to the pandemic-induced slowdown and extensive celebrity involvement. Some critics argue that the SPAC bubble is about to burst soon.
Continue reading “Regulatory Roadblocks in SPAC Listings in India”
By Yamini Jain and Gaurav Karwa
Deriving its essence from Article 3(2) of the General Data Protection Regulations (GDPR), Section 2(A) of the Personal Data Protection Bill, 2019 [PDPB] makes a provision of its extraterritorial application over data fiduciaries and data principals present beyond the territory of India. Section 2(A)(b) of PDPB makes an extraordinary provision pertaining to its applicability on all such data fiduciaries incorporated under the laws of India and brings all their foreign branches within its purview. In this light, understanding the impact of the extra-territorial application of the PDPB on multinational banks based in India that process sensitive personal data becomes particularly important. In this article, the authors aim to highlight various issues and problems arising out of extraterritorial application on multinational organizations and particularly those related to the banking sector. The authors explain the distinct meaning of the extra-territorial application of the PDPB, whether such application is in conflict with other laws, and other major issues in data localization, cloud servers, etc.
Continue reading “Impact of Extraterritorial Applicability of PDP Bill, 2019 on Banking Sector”
By Rukmini Mukherjee, lawyer based out of New Delhi and currently pursuing her LLM from Jindal Global Law School
The legal conundrum governing the position of at what stage winding up petitions pending before the High Courts (“ Company Court”) are to be transferred to the National Company Law Tribunals (“NCLTs”) have undergone various judicial pronouncements, debates and legislative amendments. The question of at what stage can a winding up petition be transferred has been recently dealt with by the Hon’ble Supreme Court in Action Ispat And Power Pvt. Ltd. Versus Shyam Metalics And Energy Ltd. This post will analyze this judgment in light of the provisions relating to winding up under the Companies Act 2013 to highlight how the same does not quite fit in within that framework.
Continue reading “To Transfer or Not to Transfer: An analysis of the Supreme Court’s decision in Action Ispat and Power Pvt Ltd v. Shyam Metallics and Energy Ltd”
By Mili Budhiraja, student at the Faculty of Law, University of Delhi
Under the Indian Partnership Act (“Act”), 1932, registration of partnership is not mandatory. But there are important repercussions of the non-registration of firms, as prescribed in Section 69 of the Act, which practically necessitates the registration at one time or the other. Section 69(3) of the Act has attracted much discourse because of the ambiguity in relation to the interpretation of the phrase “other proceedings”. The Supreme Court in the case of Umesh Goel v. Himachal Pradesh Cooperative Housing Society Ltd., held that the arbitration proceedings do not fall within the ambit of “other proceedings” and therefore, arbitration proceedings are not hit by the bar of Section 69. Through this piece, the application of the ingredients of the section will be analysed in the light of the decision of the Supreme Court in the case of Umesh Goel.
Continue reading “A Critique of the Umesh Goel v. Himachal Pradesh Cooperative Housing Society Case”
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”
Avijit Singh and Chetan Saxena
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.
Continue reading “Representation and Warranties Insurance & Need for Establishing a Legal Framework in India”