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

Ten Years of LODR: The Journey from “Minimum Principles” to “Maximum Prescriptions”

Evolution of LODR

The enactment of the SEBI Act in 1992 (“SEBI Act”), followed by the amendment of Section 21 of the Securities Contracts (Regulation) Act, 1956 (“SCRA”), empowered the Securities and Exchange Board of India (“SEBI) to regulate the process of listing of securities by public companies.Continue Reading Ten Years of LODR: The Journey from “Minimum Principles” to “Maximum Prescriptions”

Unseen Influence of Shadow Directors: Does it compromise corporate governance?

Introduction

The Companies Act, 2013 (“CA 2013”) defines a director as a person who has been appointed to the Board of a company[1]. Directors typically have various duties and obligations towards the company, shareholders and all other stakeholders. They are also subject to civil and criminal liability under CA 2013, as well as under various other statutes, which have a standard vicarious liability clause for directors and officers of the company. In this context, another concept that emerges is of a “shadow director” or a “deemed director” who is a person not officially appointed to the Board but on whose instructions and directions the Board is accustomed to act upon. In this blog, we analyse the legal position surrounding “shadow directors” in India and the United Kingdom (“UK”).Continue Reading Unseen Influence of Shadow Directors: Does it compromise corporate governance?

RPT Disclosure Standards: Regulator’s Ongoing Quest for Balance

Context

The law on related party transactions (“RPTs”) has been evolving since its inclusion in the Companies Act, 2013 (“the Act”), and the introduction of stricter regulations for listed companies by the Securities and Exchange Board of India (“SEBI” or “Regulator”) in the Listing Obligations and Disclosure Requirements Regulations, 2015 (“LODR”). Yet, India Inc. continues to falter in its battle for good governance because of abusive RPTs, inadequate disclosures, and diversion of funds of listed companies to closely held promoter entities through innovative structures and shell entities – exacerbated because promoters own or control 75 per cent of listed entities in India.Continue Reading RPT Disclosure Standards: Regulator’s Ongoing Quest for Balance

Background

Section 58(2) of the Companies Act, 2013 (“Act”), read along with its proviso, lays down that while the shares of a public company are freely transferable, any contract or arrangement entered into between two or more persons for the transfer of securities shall be enforceable as a contract.Continue Reading Can An Issuer Public Company Restrict the Transferability of Shares?

The Doctrine of Vicarious Liability of Auditors: Delhi HC Judgment in Deloitte v. Union of India

Background

India’s evolving financial reporting system has made robust corporate governance mechanisms indispensable. The need for heightened financial reporting mechanisms was first felt after the country was rocked by multiple corporate scandals, specifically 2009’s Satyam Computer scam. The scam exposed numerous auditing-related issues, namely, the manipulative practices of auditors, inadequacy of regulatory oversight in accounting and auditing standards, and the importance of accountability of the professional conduct of auditors. It also raised crucial questions related to the independence and effectiveness of auditors. Against this backdrop, there was a reverberating demand for stronger institutional frameworks to regulate and supervise accounting and auditing standards in the country. It became imperative to set up an autonomous body for financial reporting to attract foreign investment and elevate public confidence in the financials of investee companies, leading to the establishment of the National Financial Reporting Authority (“NFRA”).Continue Reading The Doctrine of Vicarious Liability of Auditors: Delhi HC Judgment in Deloitte v. Union of India

Removal of Managing Director: Legal Position and Practical Challenges

Context

A managing director (“MD”) is the principal executive officer of a company, serving on its Board in an executive capacity and is at the helm of its affairs. He is primarily responsible for managing the day-to-day affairs of the company under the overall ‘superintendence, control and direction’ of the Board.Continue Reading Removal of Managing Director: Legal Position and Practical Challenges

True and Fair View of Financial Statements: Who will finally bell the cat?

One of the most important communications by a company to its shareholders is its financial statements. It is a key document on which shareholders rely while making their decision on whether to stay invested in a company or not, as it highlights the financial health of the company. The regulators also understand the importance of financial statements, due to which the issuance of the same is heavily regulated and scrutinized. Section 129 of the Companies Act, 2013 (“CA 2013”), provides that the financial statements shall give a ‘true and fair view’ of the state of affairs of a company, while also complying with the accounting standards notified under Section 133 and be in the form as provided in Schedule III of CA 2013.Continue Reading True and Fair View of Financial Statements: Who will finally bell the cat?

Virtual General Meetings – Should it be legislated?

Context

Shareholder meetings form the bedrock of shareholder democracy in a corporate institution. It provides shareholders with the opportunity to participate in the affairs of a company, allowing them to vote in favour or against resolutions, and empowers them to question the policies and working of the management of a company. Majority and minority shareholders have the right to attend meetings, and in case of any difficulty, even designate a proxy to attend meetings on their behalf. Primarily, there are two types of shareholder meetings in India:Continue Reading Virtual General Meetings – Should it be legislated?

Share transfer restrictions under SHA: The need to revisit Section 58(2) of CA 2013

Context

A fundamental trait that distinguishes a private company from a public company is the concept of ‘transferability of shares,’ such that while the former may restrict transferability of shares, the shares of the latter, are generally considered to be ‘freely transferable’.Continue Reading Share transfer restrictions under SHA: The need to revisit Section 58(2) of CA 2013

Vote-Pooling Arrangements between Shareholders – Deeper Reflections

Cardinal Principle:

The cardinal principle of Company law, as enshrined under Section 47 of the Companies Act, 2013 ( “the Act”)provides that every equity shareholder shall have the right to vote on every resolution placed before the company and his voting right on a poll shall be in proportion to his shares in the paid-up equity share capital of the company.Continue Reading Vote-Pooling Arrangements between Shareholders – Deeper Reflections