Author: Birjesh - Administrator

A New Method of Minority Squ(ease) Out

On February 3, 2020, the Ministry of Corporate Affairs notified sub-sections (11) and (12) of section 230 of the Companies Act, 2013 along with also notifying the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020 and the National Company Law Tribunal (Amendment) Rules, 2020 (collectively, the “Takeover Notification”), which would enable shareholders of unlisted companies holding at least 75% securities (including depository receipts) with voting rights to acquire the remaining minority shareholders pursuant to a court-approved compromise or arrangement that includes a takeover offer.

Certain other methods that are generally considered for buying-out minority shareholders, often termed as minority squeeze-outs, include undertaking a selective reduction of share capital under section 66 of the Companies Act and the purchase of minority shareholding by a majority shareholder holding 90% or more of the share capital under section 236 of the Companies Act, 2013.

This note briefly discusses the new method of minority squeeze-out introduced by the Takeover Notification and considers whether the Takeover Notification makes it easier to squeeze out the minority shareholders as compared to the other available options mentioned in the paragraph above.

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The Personal Data Protection Bill, 2019

The Personal Data Protection Bill, 2019 (“PDP Bill”), which was presented before the lower house of the Indian Parliament on December 11, 2019, seeks to provide for the protection of personal data of individuals and establish a Data Protection Authority. The PDP Bill has been referred to a joint select committee of both the houses of the Indian Parliament, which is expected to submit its report in early 2020. Accordingly, there may be changes to the PDP Bill based on the recommendations of the joint select committee. Once enacted, the PDP Bill will replace Section 43 of the Information Technology Act, 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 and prevail over any other inconsistent laws in this regard (e.g., any sector-specific laws). This note provides an overview of the PDP Bill

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Insolvency and Related Considerations for Directors

Directors of a company in financial difficulty should be aware that their conduct may be subject to close scrutiny if the company is subject to insolvency proceedings under the Insolvency and Bankruptcy Code, 2016, as amended. The directors of such companies should take all steps to ensure that the company continues as a going concern. This is relevant as courts have held that unless all measures have been taken to revive a company, the making of a winding-up order may not be in the best interests of creditors, and going concern values may result in higher repayments to the creditors. In this regard, directors of a company in financial difficulty should be aware that their conduct may be subject to close scrutiny if the company falls into insolvency and such directors should be able to defend their actions provided that they were made in good faith.

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Reflections on Section 36 of the Indian Arbitration Act

The time taken and procedures involved in enforcement proceedings of arbitral awards in India have drawn substantial criticism over the years, paving the way for the amendments in 2015 and 2019 to the Arbitration and Conciliation Act, 1996. This note briefly examines the effect of the recent judgment of the Supreme Court of India in Hindustan Construction Company on the question of whether the operation of a domestic arbitral award is automatically stayed upon the filing of a challenge to the award and traces the development of the automatic stay rule through the amendments to the Arbitration and Conciliation Act, 1996 in 2015 and 2019 prior to the Supreme Court’s judgment.

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Goliath v. Goliath: The Supreme Court Verdict Putting an end to the Battle for Essar Steel

By a judgment dated November 15, 2019, the Supreme Court of India has put an end to the long drawn out battle for the acquisition of steel giant – Essar Steel India Limited (“Essar Steel”) under India’s newly introduced insolvency legislation.

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Drafting an Arbitration Agreement: An Indian Litigation Perspective

Listening to the speakers at a seminar on recent developments in arbitration law in India, it struck me that drafting arbitration agreements with an Indian counter party has become less about reflecting the intention of the parties and more about reflecting the state of the Indian judicial precedents and statutory amendments.

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Conflicts of Interest of Investor Nominee Directors

Investors or other stakeholders routinely participate in the governance of an investee entity through nominees, often appointing a nominee as a director to safeguard its interests through the exercise of a veto or an affirmative vote (that is the right to approve or reject an act or resolution concerning the business and governance of the investee company).

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Closing Trading Windows: To Trade or not to Trade

The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (Insider Trading Regulations) require listed companies to use a trading window for monitoring trades by designated persons and their immediate relatives. The compliance officer is responsible for closing the trading window under certain circumstances when designated persons are reasonably expected to be in possession of unpublished price sensitive information.

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India Chapter of the Chambers & Partners 2019 Global Practice Guide on International Arbitration

We are pleased to present the India chapter of the Chambers & Partners global practice guide on International Arbitration 2019 (Second Edition). The India chapter covers issues relating to, among others, enforcement of awards, court intervention in the arbitration process, jurisdiction of arbitral tribunals and recent amendments to the law governing arbitration in India.

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