Photo of Sindhushri Badarinath

Sindhushri Badarinath

Partner in the General Corporate Practice at the Bangalore office of Cyril Amarchand Mangaldas. Sindhushri advises on India entry strategy, corporate governance, employment and general corporate advisory specializing in employee benefit schemes (including employee stock options and share appreciation rights) and restructuring of employee benefit schemes, executive appointment and remuneration, and business/asset transfers. She can be reached at sindhushri.badarinath@cyrilshroff.com

Summary: This article examines the legal framework governing director removal under Section 169 of the Companies Act, analysing the balance between shareholder democracy and directorial protection through recent judicial pronouncements. It explores the procedural safeguards, compliance requirements, and practical challenges companies face when removing directors, especially if they are also shareholders.Continue Reading Removal of Director: Balancing Corporate Democracy with Procedural Safeguards

Independent Directors and ‘Material’ Pecuniary Relationships: Ambiguity to Clarity

SUMMARY OF THE BLOG

This blog examines the concept of ‘material pecuniary relationship’ while assessing a director’s independence under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”), and the Companies Act, 2013 (“Companies Act”). It highlights the regulatory differences in thresholds and look-back periods, and analyses key regulatory interpretations, committee reports, and market practices, including the recent informal guidance issued by SEBI.Continue Reading Independent Directors and ‘Material’ Pecuniary Relationships: Ambiguity to Clarity

Companies Act

Background

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?

Crackdown on shell companies MCA amends the Companies Incorporation Rules to provide for additional physical verification of registered offices

Background:

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

ESOP Has SEBI Put an End to ‘Sell All’ Method of Cashless Exercise

Employee stock options are frequently used as an employee incentivisation and retention tool, given the benefit accrued over time. An ESOP-wrapped compensation is attractive because the gains from the shares acquired on exercise of employee stock options are much higher than the exercise price paid for the options. While the maximum or minimum price payable on exercise of the options is not prescribed by the law – which only lays down the requirement for the price to be accounting-standard compliant –  the price typically ranges from the face value of the share to the fair market value of the share.Continue Reading ESOP: Has SEBI Put an End to ‘Sell All’ Method of Cashless Exercise?