Company Law

Rule-making powers of MCA under Corporate Laws Amendments Bill, 2026: Is it a case of excessive delegation?

Summary : The Companies Act, 2013 which came into force from 1st April 2014 and replaced the 1956 Act reflected a fundamental shift in the legislative policy where substantial provisions of the Act were left to be prescribed by way of Rules notified by the Ministry of Corporate Affairs. This practice is contrary to settled constitutional provisions. The blog suggests certain precautions and guard rails to ensure that our company law becomes a facilitator for attracting foreign investment.

Continue Reading Rule-making powers of MCA under Corporate Laws Amendments Bill, 2026: Is it a case of excessive delegation?
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
Financial Statement

Context

The cardinal principle of company law, as enshrined under Section 129(1) of the Companies Act, 2013 (“Companies Act”), is that the financial statements (“FS”) should give a ‘true and fair view’ of the state of affairs of the company, comply with the accounting standards notified under Section 133, and also be in the form provided for different classes of companies under Schedule III.

Continue Reading Non-compliance with Accounting Standards – Will it amount to an FUTP Offence?
Shareholders Rights

In a corporate democracy, the rule of majority prevails, period! Hence, in most jurisdictions, shareholders’ resolutions may be passed by a simple majority, or, where the decision may be critical to the operations or the future of a company, by a super/ special majority of at least, three-fourths. In this way, the decision of the majority binds all members/ shareholders.

Continue Reading Protection and Redressal of Minority Shareholder Rights

Context

The regulatory architecture under the Companies Act, 2013 (“Act”), and the SEBI (LODR) Regulations, 2015 (“LODR”), places independent directors (“IDs”) at the forefront of India’s quest for better corporate governance. Given that approximately 75% of listed companies in India are promoter-controlled, the MCA and SEBI have envisaged that the IDs will play a key role in safeguarding minority shareholders’ interest.

Continue Reading Gatekeepers of Governance – Independent Directors

Invesco v Zee

In a recent judgment pronounced in Invesco Developing Markets Fund v. Zee Entertainment Enterprises Limited[1] (“Judgment”), on March 22, 2022, a Division Bench of the Bombay High Court (“BHC”) allowed Invesco’s appeal against a judgment dated October 26, 2021[2]. The October 26 judgment was passed by a Single Judge of the BHC (referred to hereinafter as the “Impugned Order”), which had granted an injunction restraining Invesco from calling for and holding an extraordinary general meeting (“EGM”) of Zee.Continue Reading Bombay High Court’s Judgment in Invesco v Zee– A major boost for shareholders’ rights in India

JV Company’s Board

Background

The fiduciary relationship between a director and the company is among the foremost principles of company law, which was first enshrined by common law courts of equity. The Supreme Court of India (“SC”) first recognised this common law principle in its celebrated judgment in the Nanalal Zaver case[1], which noted that directors can be considered as “trustees” of the company, and “must exercise their powers for the benefit of the company and for that alone”.[2]Continue Reading Dilemma of a Nominee Director on the JV Company’s Board – Is there a conflict in his fiduciary duties?

Company Law

Background

The law on minority squeeze-out has not been a glorious chapter in the history of India’s company law. The Parliament, as a matter of legislative policy, appears to be uncomfortable with enacting a law that forces minority shareholders to compulsory sell their shares. The government perceives it as a kind of ‘expropriation’. Hence, despite Dr. JJ Irani Committee’s specific recommendation, our Parliament has adopted a conservative approach while providing majority shareholders with the mechanism to ‘buyout’ the shares held by the minority shareholders. Even after the ‘right to property’ was abolished as a fundamental right under our Constitution, law makers seem uncomfortable in giving such right to majority shareholders, and half-hearted attempts have been made to provide majority shareholders with the ability to fully own a company.Continue Reading Minority squeeze-out under our Company Law – Is it a legislative policy dilemma?

 

Computation of ‘net profits’ for Managerial Remuneration – Has this provision outlived its utility

Introduction

Section 198 of the Companies Act, 2013 (‘2013 Act’), prescribes a special method for computation of ‘net profits’ of a company in a financial year — which has different rules for arriving at net profit than the one prescribed under Accounting Standards.

The special methodology for computation of net profits prescribed under Section 198 is used for two purposes – (i) for determining managerial remuneration under Section 197 and Schedule V; and (ii) for determining the minimum CSR amount to be spent by the company in a financial year, under Section 135(5) of the 2013 Act.
Continue Reading Computation of ‘net profits’ for Managerial Remuneration – Has this provision outlived its utility?