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Tackling Illegitimate Shell Companies in India

[Surya Rajkumar is a third-year student at Jindal Global Law School.] Media reports in the month of July last year confirmed that the government would soon come out with the definition of a “shell company” to aid and assist the crackdown on such entities. The definition would be based on parameters submitted by the Task Force set up in February 2017 by the Prime Minister’s Office. According to the newsletter issued by the Ministry of Corporate Affairs (MCA) in May, “Obscuring ownership, excessive leveraging, rotation in transactions with no apparent business purpose, majority of shares held by other companies and disproportionate investment in shares of other companies are among the criteria

The Ever-Expanding Horizons of ‘Disputed Debts’ under the IBC: An Analysis of the Transmission Corpo

[Shivani Shenoy and Yashwardhan Rajawat are fourth-year students at Symbiosis Law School, Pune.] On October 23, 2018, the Supreme Court in Transmission Corporation of Andhra Pradesh Ltd. v Equipment Conductors and Cables Ltd. (Civil Appeal No. 9597 of 2018) (Transmission Corporation) set aside an order of the National Company Law Appellate Tribunal (NCLAT) and held that the National Company Law Tribunal (NCLT) was correct in rejecting an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by an operational creditor for initiation of a corporate insolvency resolution process (CIRP) against the corporate debtor when the debt was disputed under Section 9(5)(ii)(d

February 12 Circular Struck Down: A Step in the Right Direction?

[Manvi Khanna is a third-year student at National Law University, Odisha.] The recent report published by the Standing Committee on Finance on the banking sector in India observed that the capacity of banks to lend has been affected disastrously due to mounting non-performing assets (NPAs), posing a big challenge to the economic growth in India. NPAs are the advances in respect of which the borrower has stopped making interest and/or principal repayments for over a period of 90 days. The cash flow in the economy comes to stagnation due to dismal recycling of funds in the system, and the failure to recover loans has long term impacts on availability of credit for future businesses, industrial

Shareholder Rights and the Power of the Board of Directors: Analyzing a Conflictual Domain

[Gibran Naushad graduated from National Law University, Delhi in 2017 and is currently based in New Delhi.] The board of directors constitutes an extremely important element in the managerial hierarchy of a company, particularly in high stake matters that require the senior management of the company to play a participative role. The decision to put somebody on the board is, therefore, a cautious and a well thought-out decision. An example could be former PepsiCo Chief Indira Nooyi’s recent appointment to the board of Amazon, a move that has been in the media glare since the time the announcement was made. Shareholders, on the other hand, are essentially the owners of the company, whose right

Synergies Dooray Automotive – Statutory Dues under the IBC

[Aaditya Gambhir is a fifth-year student at National Law University, Delhi.] A long-standing issue since the inception of the Insolvency and Bankruptcy Code, 2016 (Code/IBC) is the treatment of statutory dues under the Code. The National Company Law Appellate Tribunal (NCLAT) has finally attempted to resolve the controversy in its judgment, dated March 20, 2019, in Pr. Director General of Income Tax v. M/s Synergies Dooray Automotive (Judgment).[1] This article aims to critically analyse the Judgment and point out certain consequential harms arising therefrom. The Judgment The Judgment disposes of a batch of appeals by statutory (tax) authorities from the orders of the National Company Law T

Disclosure of Material Financial Relationships: A New Dimension to SEBI (Prohibition of Insider Trad

[Prerna Raturi is a student at Symbiosis Law School, Pune.] Due to its liberalization, the Indian economy has become one of the most alluring economies around the globe. As a result, the Indian stock market has seen an increment in investments by foreign institutional investors which, in turn, has invigorated the country’s market structure. To its dismay, there exist various vices and irregularities in the Indian securities market which clog its development, one of them being the practice of insider trading. Insider trading is a malpractice involving trading in securities by a person having access to or knowledge of unpublished price sensitive information of a company which is likely to adve

New EU Rules on Foreign Investment Screening: Measuring Europe’s Response to Chinese Investment Infl

[Abhinav Srivastava is a graduate of National Law University, Delhi and is currently based out of New Delhi. He is interested in the areas of international finance law, mergers and acquisitions, and investment law.] The European Union (EU) has recently put forth a new set of rules regarding the Screening of Foreign Direct Investment on the grounds of security or public order. The regulation which will be in effect by the latter stages of 2020 was made public on the 21st of March, 2019 (though the intention to come up with such a framework had been announced on 5th March, 2019). The Union itself recognised the need to construct a comprehensive framework, allowing for the screening of FDI on t


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