01 January 0001

Corporate Amicus: August 2019

SEBI approves shares with differential voting rights - A welcome move
by L. Badri Narayanan and Pooja Vijayvargiya

SEBI has recently approved a framework for issuance of shares with differential voting rights (DVRs). Considering the ever-growing number of tech related start-ups in India, it was the need of the hour to provide for shares with DVRs, which enable such companies to not dilute control while also raising capital. The first article in this issue of Corporate Amicus elaborates on the key proposals made in the SEBI board meeting and highlights the points concerning eligibility, listing and lock-in, right of superior voting rights shares, coat-tail provisions and sunset provisions. According to the authors, with SEBI proposing these amendments for tech start-ups, India seems to be following the norms prevailing in the international arena where tech companies have introduced shares of different classes to raise capital. The authors believe that this effort of SEBI will certainly spurt the growth of start-ups in India and is a welcome move…

Roles and responsibilities of Compliance Officers under SEBI regulations
by Rohit Subramanian

The second article in this issue subtly expresses the need of autonomous working of Compliance Officer in an organization in the light of responsibilities entrusted upon him by SEBI vide SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Author points out that SEBI is of the view that Board of Director or the audit committee is to merely review the decisions made by Compliance Officer. He cautions that SEBI in its order of Satyam Computer Services Ltd. made clear that Compliance Officer cannot raise the defence that internal approvals were not available, because if such contention is accepted, it would render the concept of appointment of Compliance Officer meaningless. Author concludes that SEBI anyhow will hold compliance officer responsible when it comes to compliance with all SEBI regulation, and therefore, it is important for the professional to meticulously examine the applicable SEBI regulations while accepting the role of a Compliance Officer.

A step towards strengthening institutional arbitration in India
by Akshita Alok

The third article discusses the New Delhi International Arbitration Centre Act, 2019 which recently received its Presidential assent. The article highlights some of the key features of the Arbitration Centre which would be established as a resultant of the Act. The Centre would be a 7-member body headed by a chairperson. All the rights of the Centre shall vest with the central government. The Centre shall have a CEO and a committee which shall meet quarterly to carry out the functioning of the Centre. A key feature of the Act is the establishment of chamber of arbitration empanelling national and international arbitrators and providing a permanent panel of arbitrators. The centre may also establish Arbitration Academy to train arbitrators. It has been proposed to declare the centre an institution of national importance.

Notifications and Circulars

  • External Commercial Borrowing (ECB) Policy – RBI eases end-use restrictions
  • Standardizing reporting of violations related to code of conduct under SEBI (Prohibition of Insider Trading) Regulations, 2015
  • Modification of format for compliance report on corporate governance to be submitted to stock exchange(s) by listed entities/companies
  • Consultative paper on policy proposals with respect to resignation of statutory auditors from listed entities
  • Fees for delayed filing of e- Form DIR-3 KYC or DIR-3 KYC-WEB - Companies (Registration Offices and Fees) Fourth Amendment Rules, 2019
  • Web-based filing of e-form DIR-3 KYC-WEB - Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2019
  • Nidhi (Amendment) Rules, 2019 notified

Ratio decidendi

  • Operation of Arbitration Sections 31(8) and 31A if fees of Tribunal is decided by agreement between parties to arbitration - Delhi High Court
  • ‘Employee’ under EPF Act – Test of control and supervision over workers - Supreme Court
  • IBC - Counterclaim against corporate debtor when need not be stayed - Delhi High Court
  • Employee cannot claim wages for the period he was voluntarily absent - Supreme Court

News Nuggets

  • Arbitration of prior agreement cannot be invoked in dispute post compromise
  • Non-Banking Financial Institution is out of purview of IBC
  • Jurisdiction of specific High Court when venue of arbitration specified in contract
  • No scheme of compromise under Section 391/394 of Companies Act 1956 for FD holders
  • High Court when cannot rule on arbitration award
  • Despite overlap of issues, arbitration under two contracts to be independent
  • Arbitration – No differential treatment to be given to government
  • Contractual provisions would prevail over Section 56 of Contract Act
  • Purchase of minority share – Section 236 of Companies Act when cannot be invoked
  • Promoter of MSME corporate debtor not to compete with other Resolution Applicant
  • Consumer Protection Bill 2019 passed by Parliament

August, 2019/Issue-95 August, 2019/Issue-95

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