Tag: General Corporate

COVID-19: Coping with the Pandemic and the Changing Regulatory Regime in India

Updates | March 21, 2020 | Practice Area: Banking and Finance, General Corporate, Litigation and Arbitration, Mergers and Acquisitions

The outbreak of the coronavirus disease 2019 (COVID-19) pandemic has caused widespread disruption of businesses and daily life. As governments across the world struggle to contain the pandemic, a number of measures are being implemented aimed at minimizing its spread. In India, such measures are increasingly taking the form of mandatory social distancing through the imposition of a series of restrictions. As the situation evolves, the requirement for further restrictions is being constantly evaluated by governments and new measures are being implemented. The pandemic and the resulting measures raise a host of legal issues and concerns for businesses. This update analyzes certain legal and regulatory concerns arising in light of the COVID-19 pandemic and the consequent restrictions.

A New Method of Minority Squ(ease) Out

Insights | February 13, 2020 | Practice Area: General Corporate, Litigation and Arbitration, Mergers and Acquisitions, Private Equity

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.

The Personal Data Protection Bill, 2019

Updates | January 3, 2020 | Practice Area: Corporate Governance, General Corporate, Regulatory, Technology Media and Telecommunications

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

Conflicts of Interest of Investor Nominee Directors

Insights | October 11, 2019 | Practice Area: Corporate Governance, General Corporate

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).

Closing Trading Windows: To Trade or not to Trade

Insights | October 2, 2019 | Practice Area: Corporate Governance, General Corporate

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.

Analyzing SEBI’s Paper on Rewarding Whistleblowers

Insights | September 20, 2019 | Practice Area: Corporate Governance, General Corporate, Regulatory

The Securities and Exchange Board of India (SEBI) faces numerous challenges in investigating and determining insider trading violations. Lack of direct or conclusive evidence of violations is a key challenge in most cases. On 10 June 2019, SEBI issued a discussion paper on a proposed informant mechanism under which whistleblowers will be rewarded for reporting instances of insider trading.

Watching the Watchmen: Evolving Role of Auditors

Insights | July 25, 2019 | Practice Area: Corporate Governance, General Corporate

The roles of various gatekeepers of corporate governance, such as auditors, independent directors and credit rating agencies, has increasingly come under scrutiny as a response to the various financial scandals that shook corporate India – from Satyam to IL&FS, and more recently, in the case of the auditor resigning from Reliance Capital.

Striking a Balance on Differential Voting Rights

Insights | June 17, 2019 | Practice Area: Corporate Governance, General Corporate

The Securities and Exchange Board of India (SEBI) recently issued a consultation paper seeking public comments on a proposed regulatory regime for issuance of equity shares with differential voting rights (DVRs) by listed and to-be-listed companies in India.

Empowering Shareholders on Executive Compensation

Insights | April 3, 2019 | Practice Area: Corporate Governance, General Corporate, Regulatory

Recent shareholder activism and regulatory action have focused attention on the issue of executive compensation in India. The Companies Act, 2013 (act), restricts the total managerial remuneration payable by a public company to its directors and managers in a financial year to no more than 11% of its net profits for that financial year.

Independent Directors: Staying Mindful of Liabilities

Insights | March 20, 2019 | Practice Area: Corporate Governance, General Corporate

The role of independent directors has recently come into sharp focus in India, as lax oversight has led to crises at large listed companies. Independent directors should be aware of and mitigate potential liabilities.