In part III of our series on key legal considerations for establishing global capability centres (“GCCs”) in India,[1] we discuss the various factors that need to be considered to engage workforce for the GCCs.Continue Reading Strategically building a workforce for Global Capability Centres (GCCs) in India
This post analyses the permissibility of and key legal considerations for share-based benefits/ incentives, like ESOPs, RSUs, SARs, etc., that foreign companies offer to the employees of their Indian group companies.Continue Reading Employee Share-based Incentives by foreign companies for employees of group companies in India: Should it be an ESOP, RSU, ESPS, SAR or Phantom Stock?
In part II of our series on establishing global capability centres (“GCCs”) in India,[1] we discuss the key issues that foreign companies face when strategising the structure and model for setting-up a GCC.Continue Reading Strategic structuring and modelling Global Capability Centres (GCCs) in India: How to set up
Global Capability Centres (“GCCs”) started as offshore global in-house centres (“GICs”) in the Indian banking industry to help cut costs and provide operational support to the service offerings of a foreign entity (“Foreign Entity”). India has gained credence as a favourable destination because of its skilled human resources (wide talent pool) and competent operational costs. As of FY 2022–23, India’s approximately 1,580 GCCs have 1.66 million employees,[1] and this number is rapidly increasing.Continue Reading Global Capability Centres (GCCs) take centre stage in fuelling global growth
The ‘Draft Policy for Pre-Legislative consultation and comprehensive review of existing Rules and Regulations’, released by the Ministry of Corporate Affairs (“MCA”), became effective from January 1, 2024 (“MCA-PLCP”). This move complements the increased focus on improving the ‘ease of doing business’ across regulators in India[1] and will also help address the inherent non-uniformity in the consultative mechanisms and processes employed by various MCA-formed/governed regulatory bodies. Continue Reading Institutionalising public consultations: A step towards building a stakeholder-friendly regulatory threshold
Pursuant to the issuance of the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023, with effect from September 30, 2024, both public and private limited companies are required to convert the existing shares and issue new shares exclusively in dematerialised form, bringing an end to physical share certificates. While this seems like a small change, this post seeks to trace the transformation of ‘dematerialisation’ from a progressive and secure option for security holders to a compliance requirement, signifying an increased and progressive threshold of regulation. The post also highlights the key challenges that companies and investors may face with this change.Continue Reading Enforcing progressive compliance: Push for digitalisation by dematerialising shares of all Companies
Until very recently, the recommendations of proxy advisory firms did not impact companies much, as it did not have the power to influence or fail/ stop a resolution from being passed. However now, the recommendations of proxy advisory firms are becoming increasingly relevant given that many institutional investors are basing their positions while voting on resolutions on such advice. This is evidenced from the fact that a proxy advisory firms have recently managed to prevent a resolution for granting employee stock options to employees of a group entity of a very large Indian bank from being passed due to the absence of “any compelling reasons”.[1] In another interesting case, a proxy advisory firm came very close to preventing a resolution pertaining to an increase in the remuneration of a director from being passed on account of this increase being “skewed” and “guaranteed”.[2]Continue Reading Impact of Proxy Advisory Firms: Turning tides and failing resolutions
Key Managerial Personnel (“KMP”) play an integral role in the management and functioning of a company. Earlier, the Companies Act, 1956 under Section 269, provided for the appointment of managing or whole-time director or manager in certain cases. However, the Dr. J.J. Irani Report[1], recognized that the board of directors (“Board”) typically look towards KMP for formulation and execution of policies and recognized their role in conducting the affairs of the company. The Committee highlighted the need to recognise the concept of KMP, govern such appointments and identify them as officers responsible for certain functions of the company, along with making them liable for any related non-compliances. Further, the Parliamentary Standing Committees on the Companies Bill in 2009 and 2011[2] also discussed the necessity for the concept of KMP to be included in the Companies Act, 2013 (“Companies Act”). Accordingly, the Companies Act, re-envisioned the importance of KMP and for the first time provided for a detailed definition of KMP along with the provisions governing their appointment.Continue Reading Key Managerial Personnel Appointments: Applicability of Section 203 of the Companies Act, 2013 to private companies: does the NCLAT order cast the net too wide?
The Ministry of Corporate Affairs (“MCA”), vide notification dated August 18, 2022, notified the Companies (Incorporation) Third Amendment Rules, 2022, which further amended the Companies (Incorporation) Rules, 2014 (“Companies Incorporation Rules”), through the introduction of Rule 25B. This amendment sets out the process to be followed by the Registrar of Companies (“ROC”) to carry out physical verification of a registered office of a company.[1]Continue Reading Crackdown on shell companies: MCA amends the Companies Incorporation Rules to provide for additional physical verification of registered offices
The Ministry of Corporate Affairs (“MCA”), vide notification dated June 1, 2022, notified the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022 (“2022 Amendment Rules”), which amended the Companies (Appointment and Qualification of Directors) Rules, 2014 (“Appointment and Qualification Rules”).[1] This amendment states the security clearance requirements needed to hold directorship position in an Indian company, if an individual is a national of a country which shares land border with India.Continue Reading Raising the wall higher: This time no directorship without security clearance