Photo of Bharat Vasani

Senior Advisor - Corporate laws at the Mumbai office of Cyril Amarchand Mangaldas. Bharat has over 30 years of experience at senior management level. His areas of specialization includes company law, corporate and commercial laws, securities law, capital market, mergers and acquisitions, joint ventures, media & entertainment law, competition law, employment law and property matters. He heads firm’s media and entertainment law practice.  He is highly regarded in Government circles and in various industry organizations for his proactive approach on public policy issues. Bharat was a member of the Expert Committee appointed by the Government of India to revise the Companies Act, 2013.

Prior to joining the Firm, Bharat was the Group General Counsel of the Tata Group.  He has been at the helm of and steered several large key M&A transactions pursued by the Tata Group in the last 17 years.

Bharat’s contribution to the legal fraternity has been recognized by the Harvard Law School’s Award for Professional Excellence in 2016. Bharat has won several other national and international awards for his various achievements. He had a brilliant academic record in law and first rank holder in all India company secretary examination. He can be reached at bharat.vasani@cyrilshroff.com

Holding-Subsidiary Relationship – Legal & Regulatory Architecture

Background

Companies, as the business grows, operate through their subsidiaries for various reasons such as flexibility in operation of different units, expansion in different geographies, etc. While subsidiary is an entity over which the wholly owned subsidiary has control, the Companies Act, 2013 (“CA 2013”) recognises subsidiary companies as a separate legal entity.Continue Reading Holding-Subsidiary Relationship – Legal & Regulatory Architecture

When is a Holding Company liable for the acts and omissions of its Subsidiary? A Jurisprudential Analysis

The Companies Act in India and jurisdictions all over the world have statutorily recognised subsidiaries as a separate legal entity. Section 2(87)[1] of the Companies Act, 2013 (“CA 2013”), defines “subsidiary company” or “subsidiary” as a company in which the holding company controls the composition of the Board of Directors; or exercises or controls more than one-half of the total voting power either on its own or together with one or more of its subsidiary companies.Continue Reading When is a Holding Company liable for the acts and omissions of its Subsidiary? A Jurisprudential Analysis

Declaration of Dividend: Interplay of law and business dynamics

Context

The aim of any business organisation is to earn profit and distribute it among the owners. In case of a company, such distribution of profits is connoted as Dividend. The Companies Act, 2013 (“the Act”), inter alia provides for declaration of dividend out of profits. Profit here is the net profit of a company, as determined for preparing financial statements, as per the provisions of Section 129 of the Act and after complying with all the applicable accounting standards notified under Section 133 of the Act.Continue Reading Declaration of Dividend: Interplay of law and business dynamics

Purpose & Effect Test for RPTs – How should Audit Commitees navigate it?

Regulatory Context

The definition of ‘Related Party Transaction’ (“RPT”) under Regulation 2(1)(zc) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”), inter alia provides that with effect from April 1, 2023, a transaction involving transfer of resources, services or obligations between “a listed entity or any of its subsidiaries on one hand, and any other person or entity on the other hand, the purpose and effect of which is to benefit a related party of the listed entity or any of its subsidiaries,” will also be regarded as an RPT (referred to below as the “Purpose and Effect Test”).Continue Reading Purpose & Effect Test for RPTs – How should Audit Commitees navigate it?

NFRA Circular on Fraud Reporting and India Inc.’s Dilemma

Context:

In recent years, India has witnessed a slew of accounting frauds, especially in the booming start-up ecosystem. Even established players have not been able to escape the ‘fraud virus’, thereby tarnishing reputations built over centuries. Over the years, businesses in various key sectors of the Indian economy have been rife with corporate governance issues, as is evident from recent reports of alleged violations of accounting norms, overstatement of revenues and underreporting of expenses[1], delayed filing of documents for foreign direct investment received[2], as well as adoption of fraudulent practices for ever-greening of NPAs[3]. Despite the commendable work done by regulators in tightening various statutory provisions, corporate fraud seems to continue to plague India Inc.Continue Reading NFRA Circular on Fraud Reporting and India Inc.’s Dilemma

Key issues under Section 186 for a corporate lawyer

Legislative History of Section 186:

Granting of inter-corporate loans, making investments and provisions for guarantees was previously regulated by Sections 370 and 372 of the Companies Act, 1956 (the“1956 Act”), which mandated prior Central Government approval (along with compliance with certain other stringent guidelines prescribed by the Ministry of Corporate Affairs) for giving loans/ guarantee/ security in excess of the limits prescribed under the said sections. This position was subsequently changed with the enactment of Section 372A of the 1956 Act (by the Companies (Amendment) Act, 1999), which replaced the need to obtain prior government approval with a self-regulatory mechanism, which mandated prior shareholder approval by a special resolution before granting inter-corporate loans, guarantees or securities beyond the limits prescribed therein..Continue Reading Key issues under Section 186 for a corporate lawyer

What is the Business Judgment Rule?

The Business Judgment Rule is a legal presumption evolved by Delaware courts. It was thereafter adopted by most commonwealth countries. The presumption is that while making business decisions, Directors of a company act in good faith, on an informed basis and in the honest belief that the action is in the best interest of the company. If the above conditions are satisfied, the Board of Directors will not suffer a legal liability from a bad business decision. The rationale being that in an inherently risky global business environment, the Board should be allowed to take business risks without the constant fear of lawsuits.Continue Reading The Business Judgment Rule: The Indian context

Will ‘sale of shares’ amount to ‘sale of an undertaking’ – Has the Conundrum been resolved?

Context

‘What would constitute an ‘undertaking’ of a company’ has been among the most hotly debated topics in the history of India’s company law regime. This question arises while evaluating whether a transaction falls within the purview of Section 180(1)(a) of the Companies Act, 2013 (“2013 Act”), which corresponds to Section 293(1)(a) of

Market Rumours SEBI’s New Prescription and India Inc’s Dilemma SM

Context

With effect from October 1, 2023, India’s top 100 listed entities (based on market capitalisation) would have to mandatorily confirm, deny, or clarify market rumours to the stock exchanges, and this requirement extends to the top 250 listed entities with effect from April 1, 2024. The Securities and Exchange Board of India (“SEBI”), by way of notifying amendments to the LODR Regulations on June 14, 2023 (“LODR Amendments”), has introduced this mandatory requirement under Regulation 30 read with Schedule III of the LODR Regulations (referred to below as the “Market Rumours Amendment”).Continue Reading Market Rumours: SEBI’s New Prescription and India Inc’s Dilemma