Corporate Governance

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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

Optimal locations for Global Capability Centres (GCCs) in India: Where to set it up?

In part V of our series on key legal considerations for establishing global capability centres (“GCCs”) in India,[1] we discuss the key factors to keep in mind when determining the location where the GCC is to be set up here.Continue Reading Optimal locations for Global Capability Centres (GCCs) in India: Where to set it up?

Strategically building a workforce for Global Capability Centres (GCCs) in India

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

The year 2023 saw 85 public takeovers implemented through the tender offer route under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations). The number of takeovers were only slightly below the number of takeovers in CY22 (93 in all). The aggregate transaction size (i.e. the aggregate size of the negotiated deal and tender offer) of takeovers announced in CY23 was ₹274.27 billion, 77% lower than that of the takeovers announced in CY22, which was ₹1,180 billion. Primarily, the deal activity in CY23 was driven by domestic acquirers. Foreigners executed only three deals in this space (including only one deal by a PE player), which was substantially lower than CY22 (being 11 ).Continue Reading Public Takeovers in India: Flashback 2023

Increasing the role and relevance of ‘Proxy Advisory Firms’ in corporate governance

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

Coronavirus - COVID19- Faqs

The World Health Organisation (WHO) declared COVID-19 as a “pandemic” on March 11, 2020.

The outbreak and the rapid spread of COVID-19 has sent shock waves across global markets. It has disrupted supply chains, leading to the closure of several manufacturing facilities globally; serious disruption of air and sea traffic and closure of vital air routes, like the one between the US and Europe. This is turn has led to the collapse of stock markets around the world, leading to the loss of billions of dollars, which got wiped out in a matter of days. A combination of all these factors has led to a decline in the overall volume of global economic activity, forcing the world economy towards a possible recession. It is forcing Boards across the globe to confront a host of difficult questions on how business should be conducted during a global public health crisis.
Continue Reading COVID-19 : OFFICIALLY A PANDEMIC

CHAIRMAN OR MANAGING DIRECTOR SEBI Regulation

Section 203(1) of the Companies Act states that an individual shall not be appointed or reappointed as the chairperson, of the company as well as the managing director (MD) or the chief executive officer (CEO) at the same time, unless the articles of the company provides otherwise or the company does not carry on multiple businesses. Further, this restriction is not applicable to certain specified class of companies engaged in multiple businesses and which have appointed one or more CEOs for each such business.
Continue Reading Chairman or Managing Director? – Eenie Meenie Miney Mo

Decriminalising Companies Act Offences

Via the Companies (Amendment) Act, 2019, recommendations of the Committee to Review Offences under the Companies Act, 2013 (Committee) to re-categorise 16 out of 81 compoundable offences under the Companies Act, 2013 (Act) as civil liabilities were accepted. In a move to further relax the provisions, the Government has constituted a Company Law Committee to review aspects of criminalization in the remaining compoundable and non-compoundable offences under the Act.[1]
Continue Reading Decriminalising Companies Act Offences – Striking a Balance Between Ease of Doing Business and Corporate Governance