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Top 10 Corporate Law Rulings of 2015

These are the rulings picked by LawStreetIndia‟s Editorial Team.

1. Supreme Court : Rejects „adventurism‟, upholds NCLT/NCLAT validity;

However strikes down selection committee constitution Madras Bar Association v. UOI [LSI-486-SC-2015-(NDEL)]

2. Supreme Court : Affirms SEBI‟s jurisdiction over GDR issue; Investor interest supreme, rejects “extra-territoriality” argument SEBI v. Pan Asia Advisors Ltd. & Anr. [LSI-608-SC-2015-(NDEL)]

3. Bombay HC : Can‟t enforce “colourable device” aided debenture transaction meant to circumvent FDI policy IDBI Trusteeship Services Ltd v. Hubtown Ltd [LSI-511-HC-2015-(BOM)]

4. Delhi HC : Director remuneration not „office of profit‟; Interprets „exclusive employment‟, quashes MCA order

Jagran Prakashan Ltd. & Anr. v. UOI [LSI-865-HC-2015-(DEL)]

5. Madhya Pradesh : Unpaid salary a „debt‟, confirms employee‟s locus as „creditor‟ to file winding-up petition

Jonathan Allen v. Zoom Developers Pvt Ltd [LSI-755-HC-2015-(MP)]

6. Bombay HC : Dividend payment vide „share gifting‟ illegal; Strikes down Sec 391-394 scheme, upholds tax-objection Indian Seamless Enterprises Limited [LSI-734-HC-2015-(BOM)]

7. Bombay HC : Shareholders‟ commercial wisdom supreme, non-allotment of transferee co. shares can‟t invalidate de-merger Thomas Cook Insurance Services (India) Limited. [LSI-654-HC-2015-(BOM)]

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8. Bombay HC : Settles succession law; Legal heir, not „nominee‟ entitled to deceased person‟s shares Jayanand Jayant Salgaonkar v Jayashree Jayant Salgaonkar and Nanak Ghatalia v Swati Ghatalia [LSI-416-HC-2015-(BOM)]

9. Securities Appellate Tribunal : Lifeline for DLF, „overregulation‟ tongue-lashing for SEBI; Justice Devadhar‟s scathing dissent

DLF Limited v. SEBI [LSI-369-SAT-2015-(MUM)]

10. Securities Appellate Tribunal : Disclosure obligation under Takeover Code on „promoter-group‟, not on every „promoter‟ in group Mr. Gopalakrishnan Raman and Ors v. SEBI and Ors. [LSI-815-SAT-2015-

(MUM)]

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Top 10 IP Law Rulings of 2015

1. Supreme Court : Lays down jurisdiction test under Copyright/Trademark Act;

Applies mischief-rule of interpretation Indian Performing Rights Society Ltd. v. Sanjay Dalia & Anr. [LSI-612-SC-2015-(NDEL)]

2. Supreme Court : Frowns at misuse of „Ramayan‟ as trademark; Taking advantage of Gods impermissible Lal Babu Priyadarshi v. Amritpal Singh. [LSI-791-SC-2015-(NDEL)]

3. Madras HC : Stops tribunalization of justice; Invokes „basic structure doctrine‟, strikes down IPAB constitution Shamnad Basheer v. UOI & Ors [LSI-366-HC-2015-(MAD)]

4. Bombay HC : Expansively construes „place of business‟, allows combining of passing-off & infringement causes

Ultratech Cement Ltd. & Anr. v. Dalmia Cement Bharat Ltd. [LSI-327-HC-2015-(BOM)]

5. Bombay HC : Slams Zee for “confidentiality

breach”, copying of show concept in “Badi Devrani”

Beyond Dreams Entertainment Pvt Ltd & Ors v. Zee Entertainment Enterprises Ltd & Anr [LSI-412-HC-2015-(BOM)]

6. Delhi HC : Glenmark‟s „hindsight analysis‟ of Merck‟s diabetes-patent molecule, impermissible; Grants permanent injunction Merck Sharp & Dohme Corporation & Anr. v. Glenmark Pharmaceuticals Ltd [LSI-757-HC-2015-(DEL)]

7. Delhi HC : Strikes down lifting of corporate veil, cancels patent-case warrant against Micromax directors Yu Televentures Private Limited v. Telefonaktiebolaget LM Ericsson (Publ) & Ors [LSI-863-HC-2015-(DEL)]

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8. Bombay HC : Dismisses suit against MD‟s patent registration in own name; Plaintiff‟s „bonafides‟ vital

Darius Rutton Kavasmaneck v. Gharda Chemicals Ltd, Keki Hormusji Gharda & Ors [LSI-428-HC-2015-(BOM)]

9. Madras HC : No copyright in century old Tamil Bible,

grants injunction against groundless threats Jesus Redeems Ministries v. The Bible Society of India [LSI-223-HC-2014-(MAD)]

10. Bombay HC : Furnishing land-development drawings of approved plan under RTI Act not „copyright infringement‟ Ferani Hotels Pvt.Ltd v. State Information Commissioner [LSI-803-HC-2015-(BOM)]

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Top 10 Competition Law Rulings of 2015

1. Madras HC : Distinguishes Delhi HC, allows DG to be „informant‟; Dismisses car manufacturers‟ writ Hyundai Motor India Limited & Ors v. CCI [LSI-293-HC-2015-(MAD)]

2. Delhi HC : CCI empowered to recall Sec. 26(1) order, albeit „sparingly‟; Allows Google‟s writ Google Inc & Ors v. CCI & Anr [LSI-457-HC-2015-(DEL)]

3. Madras HC : Competition Act doesn‟t prohibit settlement between parties; Compromise terms to dictate allowability The Tamil Nadu Film Exhibitors Association v. CCI & Ors [LSI-413-HC-2015-(MAD)]

4. Competition Appellate Tribunal : Expresses dismay at „absent‟ CCI Chairperson signing order penalising cement cos. Lafarge India Limited v. CCI & Ors [LSI-857-COMPAT-2015-(NDEL)]

5. Competition Appellate Tribunal : Lack of locus/personal interest doesn‟t

render CCI powerless to examine complaint Surendra Prasad v. CCI & Ors [LSI-765-COMPAT-2015-(NDEL)]

6. Competition Appellate Tribunal : Sets aside CCI‟s Rs.52cr penalty on BCCI; Aggrieved party deserves hearing opportunity Board of Control for Cricket in India v. CCI [LSI-330-COMPAT-2015-(NDEL)]

7. CCI : Directs real estate industry to stop exploitation, calls Parliament to enact law Shri Jyoti Swaroop Arora [LSI-277-CCI-2015-(NDEL)]

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8. CCI : Absolves Flipkart/Amazon of anti-competitive practices; E-commerce growing competition, retail market unaffected Mr Mohit Manglani [LSI-461-CCI-2015-(NDEL)]

9. CCI : Closes complaint against 18 automobile manufacturers; Stringent dealership agreement „standard business practice‟ Shri K. Rajarajan [LSI-593-CCI-2015-(NDEL)]

10. CCI : 3-2 ruling saves Jaypee Group from Rs. 666 cr penalty; Integrated township project not distinct market Sunil Bansal & Others [LSI-793-CCI-2015-(NDEL)]

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Top 10 Developments under Companies Law in 2015

1. Companies Amendment Bill, 2015 receives President assent and notified

under Official Gazette

Companies Amendment Bill, 2015

received President assent on May

25, 2015 and the same was

published in the Official Gazette.

2. Over dozen sections under

the new Companies Act effective

from May 29th

MCA notified May 29, 2015 as effective date for Sections 1 to 12 and Sections

15 to 23 of Companies (Amendment) Act, 2015 to come into force. Enforced

Sections related to change in definitions of private co. & public co. with regard

to the paid up share capital, deposits, dividend declaration, loan to directors,

related party transactions, investigation of companies, establishment of

special courts, constitution of Tribunal benches.

3. Govt. constitutes Committee for recommendations on Cos Act, 2013

Govt. constituted 8 members Company Law Committee to give

recommendations on issues pertaining to implementation of Companies Act,

2013. Committee members include some members from industry namely -

Y.M. Deosthalee, Chairman, L&T Finance Holdings and Bharat Vasani, Group

General Counsel, Tata Sons. Committee is also to examine the

recommendations of other agencies like Bankruptcy Law Reforms Committee,

High Level Committee on CSR, Law Commission.

4. MCA simplifies company incorporation procedure, introduces integrated

process for document filing with Registrar

MCA amended the Cos. (Incorporation)

Rules, 2014 by introducing integrated process

for incorporation by simplifying filing of forms

for incorporation, whereby for incorporating

One Person Company, private company,

public company and producer company, the

application for allotment of Directors

Identification Number, reservation of name, appointment of directors of

proposed company, shall be filed in Integrated eForm No. INC-29. Promoters

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/ Applicants of the proposed company may prepare Memorandum of

Association (in Form INC-30) and Articles of Association (in Form INC-31),

and shall sign & witness MoA & AoA, which shall be attached eForm No. INC-

29.

5. MCA exempts private companies from certain provisions of Cos. Act,

2013, prescribes riders

MCA exempted private companies from compliance of certain sections of

Cos. Act, 2013, and had also prescribed riders for availing such exemptions.

Such exemptions include non-applicability of provisions relating to „kinds of

share capital & voting rights‟, except as

provided in their Memorandum of

Associations / Articles. MCA further

stipulated that any company which is: (a)

Holding co., Subsidiary co. or Associate

co. of such company; or (b) Subsidiary of

Holding co. to which it is also a subsidiary

– is not a „related party‟ to private

company. MCA also permitted further issue of shares to employees of private

companies by way of ESOPs by passing Ordinary resolution and also

permitted interested director of private company to participate in its board

meeting after disclosure.

6. MCA notifies phase wise Ind-AS, Exempts insurance cos, banks, NBFCs

& SMEs

MCA notified Companies (Indian Accounting Standards) Rules, 2015,

effective from April 1, 2015, which stipulated that any company may comply

with specified Indian Accounting Standards (Ind AS) for accounting periods

beginning on or after April 1, 2015. MCA stated that cos. whose equity / debt

securities are listed or are in the process of

being listed on any stock exchange in / outside

India and having net worth of Rs. 500 cr or more

shall comply with IndAS on or after April 1, 2016

and cos. whose equity / debt securities are listed

or are in the process of being listed on any stock

exchange in / outside India and having net worth

of less than Rs. 500 cr shall comply with IndAS

on or after April 1, 2017. Insurance cos., banking cos., NBFCs and cos. listed

on SME Exchange were exempted from applying IndAS.

7. MCA prescribes procedure & monetary threshold for fraud reporting by auditor to Govt.

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MCA amended Companies (Audit and Auditors) Rules, 2014 and substituted

Rule 13 relating to „Reporting of frauds by auditor and other matters‟. As per

the amendment if an auditor (including Cost Auditor and Secretarial Auditor),

in the course of performance of his duties as statutory auditor, has reason to

believe that an offence of fraud, which involves / is expected to involve

individually an amount of Rs. 1 crores or above, is being / has been

committed against the company by its officers or employees, the auditor shall

report the matter to Central Government. Where the fraud involves for an

amount less than Rs. 1 crore, the auditor shall report the matter to Audit

Committee or to the Board of Directors, immediately but not later than 2 days

of his knowledge of the fraud.

8. MCA‟s riders for Audit Committee‟s omnibus approval for Related Party Transactions

MCA amended Companies (Meetings of Board and its Powers) Rules, 2014 and included Rule 6A relating to „Omnibus approval for related party transactions (RPTs) on annual basis‟. As per the amendment all RPTs shall require approval of the Audit Committee („AC‟) and the AC may make omnibus approval for RPTs proposed to be entered into by the company subject to compliance of certain conditions.

9. Amounts received by private cos. from directors/members pre-April 1,2014, not „deposits‟

MCA clarified on the applicability of Cos. (Acceptance of Deposits) Rules, 2014 on amounts received by private cos. from their members, directors or their relatives before April 1, 2014 (i.e. Before commencement of Cos. Act, 2013) and stated that such amounts received by private cos. shall not be treated as „deposits‟ under Cos. Act, 2013, however the disclosure under „Notes‟ is mandatory in the Financial Statements for FY 2014-2015.

10. MCA excludes money received from „relative of director of pvt co.‟ from „deposit‟

MCA issued Cos. (Acceptance of Deposits) Second Amendment Rules, 2015, and amended definition of „deposits‟ under Companies (Acceptance of Deposits) Rules, 2014. Definition of „deposits‟ now excludes any amount received from director or “a relative of the director of the Private co.”, subject to the condition that such person shall furnish a declaration that the amount is not being given out of funds acquired by him by borrowing / accepting loans / deposits from others and the co. is under obligation to disclose the details of money so accepted in the Board‟s report.

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Top 10 Developments under Securities Law in 2015

1. SEBI notifies Listing Obligations & Disclosure Requirements,

Regulations; Aligns with Cos. Act, 2013

SEBI notified Listing Obligations and Disclosure

Requirements, Regulations, 2015 („Listing

Regulations‟), and prescribed 90 days for its

implementation. Following provisions of the Listing

Regulations were applicable with immediate effect:

(i) Passing of ordinary resolution (instead of special

resolution) for all „material related party

transactions‟ subject to related parties abstaining

from voting on such resolutions, in line with Cos.

Act, 2013 provisions, and (ii) Re-classification of

„promoters‟ as „public shareholders‟ under prescribed circumstances.

2. SEBI prescribes uniform Listing Agreement format, execution to be done within 6 months

Pursuant to Listing Regulations, SEBI prescribed format of uniform Listing

Agreement and stated that listed entity which had previously entered into

agreement(s) with recognised Stock Exchange(s) to list its securities shall

execute fresh listing agreement with such Stock Exchange within 6 months.

3. SEBI notifies Insider Trading Regulations

SEBI issued Prohibition of Insider Trading Regulations, 2015, which were

effective from May 15, 2015

4. SEBI allows delisting post takeover, subject to disclosure of „intention‟

SEBI amended Takeover Code 2011, whereby an acquirer making public announcement of an open offer for acquiring shares, may also delist co. in accordance with Delisting Regulations, subject to condition that acquirer has declared the intention of delisting the company at time of making detailed public statement.

5. SEBI enables capital raising by

start-ups through Institutional

Trading Platform

SEBI Board simplified the framework for capital raising by technological start-

ups and other companies and enabled capital raising by technological start-

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ups and other companies through Institutional Trading Platform (ITP). SEBI

clarified that only two categories of investors can access ITP: (i) Institutional

Investors (QIB as defined in SEBI (ICDR) Regulations, 2009 along with family

trusts, systematically important NBFCs registered with RBI and the

intermediaries registered with SEBI, all with net-worth of more than Rs. 500

crore) and (ii) Non-Institutional Investors (NIIs) other than retail individual

investors.

6. SEBI amends Takeover Code, exempts open-offer for debt-equity conversion under strategic debt-restructuring scheme

SEBI exempted acquisition of equity shares by consortium of banks / financial

institutions and other secured lenders pursuant to conversion of their debt as

part of strategic debt restructuring scheme in accordance with RBI guidelines,

from open offer requirement, subject to compliance of SEBI (ICDR)

Regulations.

7. SEBI amends ICDR Regulations, extends tenure of warrants, introduces 25% upfront consideration payment SEBI amended tenure of warrants under Issue of Capital and Disclosure Requirements. Tenure of warrants issued along with public issue / rights issue of specified securities shall not exceed 18 months (earlier 12 months) from their date of allotment on condition that price / conversion formula of warrants shall be determined upfront and at least 25% of consideration amount shall also be received upfront. In case warrant holder did not exercise option to

take equity shares against any of the warrants held by him, consideration paid shall be forfeited by the issuer co.

8. BSE revises eligibility criteria

for SME Listing; Enhances financial parameters

BSE revised the eligibility criteria relating to financial parameters for strengthening entry norms for SME

Exchange and enhancing screening of cos. seeking listing on SME segment and accordingly, enhanced the post-issue paid up capital, net worth & net tangible assets threshold to Rs. 3 crores.

9. SEBI provides beneficial clarification on ESOPs, lifts anchor investors cap

SEBI in its board meeting held on August 24, 2015, approved the removal of current restriction on the maximum number of anchor investors (currently 25) for anchor allocation of above Rs. 250 Crore public issue. It had also approved the proposal for amending SEBI (Share Based Employee Benefits) Regulations, 2014, whereby listed cos. with employee benefit trusts shall have

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to re-classify shareholding of Trust as „non-promoter and non-public‟ category and also ensure compliance with requirement of minimum public shareholding within 3 years.

10. SEBI approves smoother IPO process, takeover code relaxation for distressed cos & disclosures overhaul

SEBI in its board meeting held on March 22, 2015, approved the policy initiative of extensive and integrated technology use for facilitating and easing process of investing in securities market (e.g. e-IPO, Aadhaar based e-KYC). SEBI Board also approved the proactive steps for meeting aspirations of young entrepreneurs and catering to financing and listing needs of start-ups with measures like Institutional Trading Platform, crowd funding or separate carve out for such cos. in SEBI ICDR Regulations.

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Top 10 Developments under Foreign Exchange Laws in 2015

1. Govt. issues Press Note for FDI liberalization, opens-up FDI in construction & defense sector

With an objective of liberalizing and simplifying FDI policy for providing ease

of doing business in India, Govt. amended FDI Policy in construction

development sector, defense sector.

Govt. prescribed new sectoral caps

& entry routes in broadcasting sector

and introduces full fungibility of

foreign investment in private banking

sector. With an objective of attracting

larger investments, Govt. extended

special dispensation of NRIs to

companies, trusts and partnership

firms, which are incorporated outside India and are owned & controlled by

NRIs, whereby such entities owned and controlled by NRIs will be treated at

par with NRIs for investment in India.

2. DIPP reviews FDI policy in various sectors; Amends consolidated FDI Policy, effective immediately

DIPP reviewed the FDI Policy on various sectors, and amended the

Consolidated FDI Policy of 2015. Definition of „manufacture‟ was introduced

and threshold for cases under Govt. route was amended. Ministry of Finance

will consider FIPB‟s recommendation on proposal with total foreign equity

inflow of and below Rs. 5,000 crore and FIPB‟s recommendation on proposals

with total foreign equity inflow of more

than Rs. 5,000 crore would be placed for

CCEA‟s consideration.

3. Cabinet approves introduction of composite FDI caps for attracting foreign investments

Union Cabinet approved to review the

existing FDI policy on various sectors, by

introducing composite caps for attracting

foreign investments. FII/FPI/QFI may invest in Indian company under Portfolio

Investment Scheme which limits individual holding of an FII/FPI/QFI below

10% and aggregate limit for FII/FPI/QFI investment to 24%. Limit of 24% can

be increased to sectoral cap, as applicable, by the Indian company through

board and shareholders‟ approval and prior RBI intimation.

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4. Facility sharing arrangements between group cos. not „real estate business‟ within FDI policy: DIPP

DIPP clarified that facility sharing (through leasing/ sub-leasing) arrangements

between group companies will not be treated as „real estate business‟ within

provisions of FDI Policy.

5. Cabinet approves „NRI‟ definition expansion, investments to be deemed domestic investment

Union Cabinet approved amended definition of „NRI‟ to mean an individual

resident outside India, who is citizen of India or is an OCI cardholder within

meaning of Citizenship Act and POIs cardholders are deemed to be OCI

cardholders.

6. Eyeing foreign capital, RBI liberalizes ECB framework, prescribes fewer

end-use restriction

RBI revised External Commercial

Borrowing framework, based on

following overarching principles: (i)

More liberal approach, with fewer

restrictions on end-uses, higher all in-

cost ceiling, etc. for long term foreign

currency borrowings, (ii) More liberal

regime for INR denominated ECBs

where currency risk is borne by

lender, (iii) Expansion of the list of overseas lenders to include long-term

lenders, (iv) Small negative list of end-use restrictions applicable in case of

long-term ECB and INR denominated ECB; (v) Alignment of list of

infrastructure entities eligible for ECB with harmonized list of Govt.

7. RBI issues clarification on FDI, states „RBI-approval‟ not required at any

stage

RBI issued clarification that according to FEMA Regulations, an Indian

company receiving FDI does not require any prior RBI approval at any stage,

however, it is only required to report the capital inflow and issue of shares to

RBI in prescribed formats.

8. Cabinet approves FDI policy amendment, “medical devices” under 100% automatic route

Union Cabinet permitted 100% FDI under automatic route for manufacturing

of medical devices and defined „medical devices‟ in detail.

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9. RBI enables online filing of Foreign Currency - Shares Transfer (FC-TRS)

returns

RBI enabled online filing of Foreign Currency Transfer of Shares (FC-TRS)

returns for reporting transfer of shares, convertible debentures, partly paid

shares and warrants from a person

resident in India to a person resident

outside India or vice versa.

10. RBI allows Indian cos. to raise funds via INR-bonds, prescribes detailed framework

RBI laid down framework for issuance

of Rupee denominated bonds overseas

within ECB Policy. „Eligible borrowers‟ to include any corporate / body

corporates, REITs, InvITs, and „recognised investors‟. Under automatic route,

the amount equivalent of USD 750 million p.a. can be raised, beyond which

RBI approval will be required.

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Top 10 Most Viewed Master Class of 2015

1. Stamp Duty Ghost Haunts Corporate Arrangements

Issue of stamp duty on corporate arrangements

like mergers, amalgamations and demergers

has been highly litigated. Mr. Gajendra

Maheshwari (Managing Partner, Reina

Legal) and Mr. Ankur Jain (Partner) in their

article analysed the present situation,

particularly in the State of Delhi, in light of HC

decision in Delhi Towers Ltd. vs G.N.C.T. of

Delhi. According to the authors, though HC had

slayed all doubts regarding applicability of stamp duty on corporate

arrangements, lack of effective assessment and recovery mechanism had

resulted in many Court orders remaining unstamped. Authors strongly urged

introduction of specific entry for such transactions in respective Stamp Duty

Schedules of States, which would be bring more certainty and enable

Companies to pay duty on self assessment basis.

2. Foreign Investment in India : Reforms Refined and Continue

Analyzing the FDI reforms, the authors Kishore Joshi (Head, Regulatory practice, Nishith Desai Associates), Ruchi Biyani (Senior Member, Regulatory practice) and T. P. Janani (Senior Member, International tax practice and succession and wealth planning practice), in their article stated that these reforms were expected to have a wide-ranging impact. With respect to the amendment to FDI policy on LLPs, whereby eligible foreign investment in LLPs would now be allowed under automatic route, the authors mentioned that the objective of such announcement was to bring investment in LLPs in line with that of companies. However, authors pointed out that, “it is important to note that other existing restrictions for FDI in LLPs (which are not applicable in case of companies) may continue to apply. For example, debt investments (both convertible and non-convertible) are not allowed in a LLP.”

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3. New Insider Trading Regulations – Keep it Simple, SEBI

The author Prashant S. Vaishampayan (Practising Company Secretary) in his detailed analytical piece took us through the key definitions and changes in disclosure requirements. The author critiqued the new, novel concept of „trading plan‟ and stated that “It is not made clear anywhere whether pre-clearance is necessary or not – for transaction implementation which are incorporated in the trading plan.” Terming the regulations as complex the author prescribed a 4 point formula for keeping the Insider Trading Code simple yet

effective.

4. Jurisdiction issue : IP Law vs CPC In their article, the authors, Gowree Gokhale (Partner & Head, TMT & IP Law Practice, Nishith Desai Associates), Aarushi Jain (Senior Member, TMT & IP Law) and Aaron Kamath (Member, TMT & IP Law Practice) briefly analysed the Bombay High Court ruling in Ultratech Cement Ltd. & Anr. v. Dalmia Cement Bharat Ltd. [LSI-327-HC-2015-(BOM)]. They stated that the Court has expanded the scope of its jurisdiction u/s 134(2) of Trade Marks Act to allow the filing of an infringement suit even if „one of the plaintiffs‟ has a place of residence or business within the jurisdiction of the district court.

5. SC puts directors „on notice‟ over cheque dishonouring

Supreme Court in a cheque bouncing case [LSI-475-SC-2015-(NDEL)], held that the notice u/s 138 of Negotiable Instruments Act („NI Act‟) to a company was sufficient and separate notices to directors were not required. Interpreting this ruling, Mr. Apurv Sardeshmukh (Partner, Legasis Partners, Advocates & Solicitors), in his article, stated that, “the Supreme Court has done away with the requirement of issuing separate notices to the Directors.. and a single notice of demand.. be considered to have been issued to the Directors as well

and the liability of Directors can arise on the basis of such notices.”

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6. How “free” is the free share transferability concept? The Bombay High Court in Bajaj Auto Ltd v Western Maharashtra Development Corporation Ltd [LSI-479-HC-2015-(BOM)] upheld the validity of a pre-emption clause between the shareholders of a public co. Expressing agreement with the aforementioned ruling, the authors, Vyapak Desai (Partner & Head of International Litigation & Dispute Resolution Practice at Nishith Desai Associates) and Satish Padhi (Member, Corporate & Commercial Law Practice) mentioned that even under Companies Act, 2013 (proviso to Section 58(2)), express recognition is given to private consensual arrangements and pre-emption clauses in a public company. Referring to 57th report of the Parliamentary Standing Committee on Companies Bill, 2011, they stated that the intention behind inserting proviso to Section 58 (2) was to codify the pronouncements made by various courts holding that contracts relating to transferability of shares shall be enforceable under law.

7. Entrenchment clause – Question mark on Validity!

Companies Act, 2013 introduced the provision of having

„entrenchment‟ clause in Articles of Association, however,

it did not define it. The author, Vijay Kumar (Lawyer,

Madras High Court), in his article defined

„entrenchment‟ referring to Oxford Law Dictionary. In

absence of any definition or explanation of such a clause

in the statute, the author expressed his doubt on validity

of such entrenchment clause and stated, “The additional

safeguard provided by the Entrenchment Clause will

raise number of legal issues about their validity”.

8. Director General & Competition Commission Powers: Madras HC Sets

Precedent

The authors, Gowree Gokhale (Partner and

Head of TMT Practice at Nishith Desai

Associates), Huzefa Tavawalla (Co-Head,

Commercial Law Practice) and Satish Padhi

(Member, Competition Law Practice), in their

article, analysed the Madras HC ruling Hyundai

Motor India Limited v. Competition Commission

of India [LSI-293-HC-2015-(MAD)] in depth and

stated that it set a precedent. Taking the readers through each and every

issue in detail, they mentioned that, “the Madras High Court has distinguished

the decision of the Delhi High Court in Grasim Industries on facts by stating

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that the DG did not go beyond the scope of his powers as he was merely

providing additional information in relation to the subject of which the CCI

already had knowledge.”

9. Unified regulator for equity & commodities market - A Tax Spin to SEBI-

FMC Merger!

Mr. Sunil Gidwani (Partner - Tax and Regulatory

Services, PwC) in his article analysed the impact of

SEBI-FMC merger on the characterisation of

commodity and currency derivatives transactions under

the provisions of the Income Tax Act for applying set-

off rules. He stated that, “it should be possible to take a

view that currency derivatives and commodity

derivatives will qualify as ordinary business

transactions and accordingly, any losses arising from

such transactions should be eligible for set-off against

any other business profits and the merger of SEBI and FMC should not have

an adverse tax impact, though a clarification by amendment in law or a CBDT

circular is desirable”.

10. SC clears NCLAT roadblocks - Can professionals cash in?

Mr. Mahesh A. Athavale (Company Secretary and

Partner, KANJ & Associates) analysed the SC ruling

that upheld the validity of NCLT/NCLAT and stated that

the ruling is a welcome step “as it will reduce the burden

of the Supreme Court, High Courts and CLBs on the

corporate law related matters, which will ultimately help

in unlocking the value of distressed assets”.

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