Photo of Bharath Reddy

Bharath Reddy

Subscribe to Bharath Reddy's Posts

Partner  in the General Corporate Practice at the Bangalore office of Cyril Amarchand Mangaldas. Bharath advises on entry strategy, foreign investment, investigations and general corporate advisory, specializing in employee stock options, investigations and executive appointment and remuneration. He is also part of the core team of the firm’s Corporate Governance Centre, the first of its kind, it is the centrepiece of the Firm’s thought leadership and advisory initiatives in the practice area, which focuses on advising various stakeholders in the governance space. Bharath can be reached at bharath.reddy@cyrilshroff.com

Background

India Inc’s initial public offering (“IPO”) landscape has witnessed significant growth in recent years, with numerous companies entering the capital markets to fund their growth and offer exits to existing investors. An IPO in India requires navigating a complex regulatory framework, complying with various provisions, and addressing stakeholders’ interests, including employees with stock options. In our post[1], we had assessed companies’ eligibility to undertake an IPO in situations where any individual holds rights entitling them to acquire equity shares of the company, or where there are any outstanding convertible securities that can be converted into the company’s equity shares.Continue Reading Amendment to make companies with outstanding Stock Appreciation Rights IPO eligible: A few steps closer, but not there yet

Background and Introduction

An “independent director” (“ID”) is defined as “an independent director referred to in sub-section (6) of section 149”,[1] where Section 149(6) of the Companies Act, 2013 (“Act”), clarifies that an ID is “a director other than a managing director or a whole-time director or a nominee director” of the company. To be appointed as an ID, a person must fulfil an elaborate set of objective and subjective criteria separated across equity unlisted and listed companies. Continue Reading Sufficiency of extant law to address governance concerns in relation to “independence” of an independent director in relation to subsequent directorships with the company

Evaluating the Contours of Permissible Remuneration for directors of a company in India

Background and Introduction

All companies incorporated in India are mandated to constitute a board of directors,[1] to which companies appoint different kinds and classes of directors – managing director (“MD”), independent director (“ID”), non-executive and non-independent director (“NED”), whole time director (“WTD”) or executive director (“ED”). Given the pivotal role that a company’s directors play in the governance and operations of companies, the Companies Act, 2013 (“Act”), regulates different facets of a directorship from the appointment, duties, and responsibilities to the remuneration. This blog discusses the contours of remuneration limits to evaluate the length and breadth of permissible director remuneration. “Remuneration” has been defined as “any money or its equivalent given or passed to any person for services rendered by him and includes perquisites as defined under the Income-tax Act, 1961[2]”.[3]Continue Reading Evaluating the Contours of Permissible Remuneration for directors of a company in India

Competing to be the global ‘destination of choice’ for GCCs: Karnataka attempts to set the global standard with a first-of-its-kind GCC-centric policy

Background

Global capability Centres (“GCCs”) have taken centre stage today because of their contribution towards the growth and expansion of multi-national corporations (“MNCs”) and towards boosting the economic growth of many developing countries in which they are located.[1] These centres are set up to primarily take on a service role for the global group of the MNCs. Evolving from back offices and cost-arbitrage centres, GCCS have transformed into potential alternative technological and strategic development headquarters. Today, many regions in developing economies, including in India, have started competing to establish themselves as a GCC hub and emerge as a “destination of choice”. Given the transformative role GCCs play in job creation, technology advancement, and skill enhancement, and positioning India at the forefront of innovation and service delivery, many GCCs in India are vying for that spot. With an estimated 1,700 GCCs engaging 1.66 million employees to generate an annual revenue of USD 64.6 billion, India qualifies as a “tried-and-tested” GCC-friendly ecosystem. In the backdrop of India’s “techade”, the market size of the country’s GCC ecosystem is projected to surpass USD 100 billion, which could propel India to achieve its ambition of becoming a USD 1-trillion economy.Continue Reading Competing to be the global ‘destination of choice’ for GCCs: Karnataka attempts to set the global standard with a first-of-its-kind GCC-centric policy

Reimagining Workforce Retention Strategies through Employee Co-Ownership

Companies in the twenty-first century use unique workforce retention strategies, especially long-term incentives that involve direct/indirect co-employee ownership. This post aims to discuss the regulatory framework governing share-linked and share-based employee benefits that companies offer.[1]Continue Reading Reimagining Workforce Retention Strategies through Employee Co-Ownership

Proposal to make Companies with Outstanding Stock Appreciation Rights (SARs) eligible to undertake an IPO

Background

Historically, companies have provided employees with share-based incentives by way of employee stock options (“ESOPs”). However, with evolving corporate incentive structures, various new models have emerged, especially driven by start-ups. These incentives models include Stock Appreciation Rights (“SARs”), Restricted Stock Units (RSUs), Performance Stock Units (PSUs), Employee Share Purchase Schemes (“ESPS”), Phantom Stock Units (PSU), Save As You Earn Share Schemes (ShareSave), Non-qualified stock options (NSOs), Management Stock Options (MSOP), etc. Generally, employees look forward to an “exit event” to realise gains from these incentive structures, with an Initial Public Offering (“IPO”) being one of the most common “exit events”. Continue Reading Proposal to make Companies with Outstanding Stock Appreciation Rights (SARs) eligible to undertake an IPO

Regulatory framework governing employee benefits by equity listed companies

This post analyses the scope of the regulatory framework governing employee benefits by equity listed companies in India and the applicability of the SEBI (Share-Based Employee Benefits and Sweat Equity) Regulations, 2021, to employee welfare trusts set up by promoters and share-linked but purely cash-based employee benefits.Continue Reading Regulatory framework governing employee benefits by equity listed companies

GCC Series: Setting-up Global In-house Centres (GICs) in India: Key regulatory considerations

In part VI of our series on key legal considerations for establishing global capability centres (“GCCs”) in India,[1] we discuss global in-house centres or GICs that precede and are a variant of current GCCs.Continue Reading GCC Series: Setting-up Global In-house Centres (GICs) in India: Key regulatory considerations

Ultimate parent’s professional CEO a Significant Beneficial Owner: Do companies have to re-evaluate their corporate approval process and reporting line structures?

Background

The genesis of the concept of ‘significant beneficial ownership’ under Indian law can be traced to the Financial Action Task Force (“FATF”) recommendations on issues pertaining to ‘transparency and beneficial ownership of legal persons and arrangements’. Set up in 1989, the FATF is a global inter-governmental body, now serving as a watchdog for global money laundering and terrorist financing. Continue Reading Ultimate parent’s professional CEO a Significant Beneficial Owner: Do companies have to re-evaluate their corporate approval process and reporting line structures?