In this chapter, we adopt a sector-specific approach to corporate scandals in one jurisdiction, namely India, to examine how corporate governance factors contributed to the scandals on the one hand and how the scandals have either resulted in governance reforms or merit further legal or regulatory transformations on the other. In doing so, we train our sights on the banking and financial services (BFS) in India. After highlighting the specific attributes in governance for BFS companies, including in the Indian context, we outline our aims for the chapter and briefly set out its roadmap. We explore three research questions. First, we consider whether and how poor corporate governance norms and practices contributed to the BFS scandals in India over the last decade. This is essentially the contribution question. Second, we explore the reforms, if any, that were introduced to the laws and regulations relating to corporate governance in the aftermath of these scandals. This covers the reformation question. Finally, we deliberate on reforms that are still required to be carried out based on the learnings from these governance scandals in BFS companies: the normative question. In examining our research questions, while we focus on the governance scandals in BFS companies in India, we seek to make comparisons to international examples to the extent necessary. We structure our chapter essentially along the lines of three broad contributive factors that have led to scandals in BFS companies in India, and highlight the reformative and normative factors relating to each of them. For each, we select one case study involving a recent governance scandal in a BFS company in India within the last decade. The YES Bank episode (2020) illustrates the risks of star-promoter control, excessive risk-taking and wealth tunnelling. The IndusInd Bank accounting scandal (2025) highlights the failure of internal and external gatekeepers, particularly the board and auditors. The IL&FS crisis (2018) demonstrates how regulatory fragmentation, regulatory arbitrage and inter-regulatory turf wars can contribute to systemic failure. Taken together, the cases demonstrate that these governance failures require more than piecemeal responses, calling instead for a wholesale reconsideration of the corporate governance framework applicable to BFS companies.

From corporate social responsibility (CSR) to environmental, social and governance (ESG) matters. Although ESG is well-understood to be market-driven, this paper focuses instead on the legal and regulatory measures governing ESG factors in India. It, therefore, examines the developments and challenges surrounding ESG in India along three fronts. First, the chapter explores the roles and responsibilities of corporate boards in accounting for ESG factors in their decision-making process. Second, and relatedly, it analyses the obligations of companies to engage in disclosure and reporting on ESG matters. Finally, viewed from the investor perspective, it examines ESG considerations that underpin the shareholder stewardship regime in India. On each of these aspects, the chapter first outlines the key developments, and then highlights possible challenges in realising the regulatory goals on the ESG front.

In recent times, there has been an unprecedented surge in national security review (NSR) measures, with host jurisdictions implementing restrictions on foreign investments and intensifying national security scrutiny, especially in the context of cross-border takeover transactions within sensitive sectors. This paper argues that this evolving landscape disrupts conventional takeover regulation in a manner that impedes the operation of the global takeover market. To substantiate this assertion, the paper leans on four paradigms: (1) interest paradigm; (ii) decision paradigm; (iii) information paradigm; and (iv) accountability paradigm. The crux of our policy proposal is to broaden the purview of takeover regulation to encompass national interest considerations. Adopting such a reconciliatory approach would ensure that cross-border takeover transactions are not stymied by the somewhat erratic and whimsical implementation of NSR measures, while preserving the integrity of the rule-based global takeover market without compromising legitimate national security concerns.

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Journal Article Special purpose acquisition companies: A discordant tale of two Asian financial centres Get access Umakanth Varottil Umakanth Varottil Associate Professor, Faculty of Law, National University of Singapore, Singapore E-mail: v.umakanth@nus.edu.sg Search for other works by this author on: Oxford Academic Google Scholar Capital Markets Law Journal, Volume 18, Issue 2, April 2023, Pages 202–232, https://doi.org/10.1093/cmlj/kmad003 Published: 21 February 2023 Article history Accepted: 29 January 2023 Published: 21 February 2023

Although the demand for corporate legal services has grown significantly, so has the pressure on companies to reduce legal costs, thereby necessitating a "data-and-metrics" driven approach to legal fees. Accordingly, we exploit the availability of a unique dataset comprising legal fees that Indian corporations have spent over a 30year period from 1990 to 2020. We undertake the first cross-sectional analysis of legal fees across various exploratory variables over a long period of time. The results show an increasing trend in the quantum of legal fees incurred by Indian companies during the period. They overwhelmingly suggest that large companies (measured along the lines of total assets, industry segmentation, export and import orientation) spend a higher quantum in legal fees than do small companies. Legal costs are higher for companies that undertake capital raising or mergers and acquisitions transactions in a given financial year than those that do not experience such events. Finally, legal fees tend to be higher in certain industry sectors such as technology and energy where significant contracting, regulatory or other form of legal work is pervasive. It is our expectation that the results and accompanying data analysis will aid purchasers of legal services (being corporations and their in-house legal departments) as well as providers (being law firms and legal professionals) in planning and budgeting for legal fees, and also in devising and implementing appropriate fee arrangements.

Companies in financial distress generate externalities on the environment in which they operate, thereby resulting in adverse impacts on various stakeholders such as creditors, shareholders, employees, and the economy as a whole. In order to minimise such repercussions, the Indian Parliament has enacted a series of legislations that has culminated in the Insolvency and Bankruptcy Code, 2016 (‘IBC’). Our goal in this chapter is to explore the tremendous volume of constitutional jurisprudence generated by the Indian Supreme Court in the context of the IBC. We find that the judiciary has generally adopted a facilitative and rather non-interventionist approach while determining the constitutionality of the IBC and its several amendments. It has rendered utmost deference to the Indian Parliament and resisted from second-guessing legislative decision-making from a constitutional perspective. The Court has played an active role in paving the way for an unhindered implementation of India’s monumental corporate insolvency legislation.

The extensive literature on strategic climate litigation focuses mainly on lawsuits brought against private litigants or the state based on breaches of environmental law, tort law, human rights law or public law. Relatively far less has been written about corporate and securities litigation against companies or their directors, let alone in relation to Asia. This paper fills these gaps. It critically examines whether and how the enforcement of corporate law and securities law can be used as a tool to address climate-related risks in three leading common law jurisdictions in Asia – India, Singapore, and Hong Kong. The central argument of this paper is that because of the limitations of private and public enforcement of corporate law, public enforcement of securities law and listing rules is a more effective mechanism in addressing climate risks in the three jurisdictions.

Optimal takeover regulation aims to promote efficient changes of corporate control while curbing inefficient takeovers. Viewed from a comparative perspective, the Anglo-American prototypes spearhead not only the discourse but also the dissemination of takeover regulation globally. At the one end of the spectrum, the law in the United States (U.S.) follows the "market rule," whereby transfers of corporate control benefit from a regulatory freehand. At the other end of the spectrum lies the "mandatory bid rule" (MBR), epitomized by takeover regulation in the United Kingdom (U.K.). Under the U.K.'s version of the MBR, an acquirer who acquires de facto control over a target must make a general offer to the remaining shareholders to acquire all of their shares at the same price it paid to acquire the controlling block.In this article, we aim to analyze how and why six significant Asian jurisdictions adopted the MBR and its variants. This is puzzling given that the jurisdictions display considerable divergence in terms of structural, legal, and institutional foundations, not only with their Anglo-American counterparts but also even among themselves. In this article, we challenge the prevailing notion that the binary Anglo-American approach constitutes the framework for the dissemination of takeover regulation worldwide.We claim that because of the political economy of takeover regulation in the Asian jurisdictions, the choice to adopt various intermediate positions is by design and not by default. Considering the market rule provides suboptimal protection to minority shareholders and the MBR curbs the market for corporate control, the intermediate positions aim to balance these somewhat conflicting objectives. Our study contributes to the wider debate surrounding the appropriate takeover regulation and, more specifically, the claims made by the proponents of the market rule on the one hand and the MBR on the other.

Venture capital ('VC') is considered an essential component of any economy, as it engenders innovation and fosters the growth of early-stage business ventures. If so, how does one develop a VC market? This question has exercised the minds of scholars, and a number of theories have been proffered, including the reliance on private contracting and the intervention of the government (Ronald J Gilson, Engineering a Venture Capital Market: Lessons from the American Experience (2003); Christopher Gulinello, Engineering a Venture Capital Market and the Effects of Government Control on Private Ordering: Lessons from the Taiwan Experience (2005)).

ABSTRACT Although not codified under statute, the derivative action has been the mainstay of shareholder remedies for wrongs caused to the company. Conventional jurisprudence has recognized the derivative action under common law. However, the Delhi High Court in ICP Investments v Uppal Housing went against the grain to hold that derivative actions are subsumed within section 241 of the Companies Act, which deals with direct actions, and that a derivative action is per se not maintainable under common law. In this Note, I argue that this finding is unsustainable in law. First, it represents an inchoate appreciation of the distinction between wrongs to the company and wrongs to the shareholders. Second, it is not at all clear that the oppression, prejudice and mismanagement remedy under section 241 of the Act is wide enough to assimilate derivative actions. Third, the Court’s ruling fails to square up with procedural and remedial considerations.

Climate change has garnered significant attention given that it poses a serious challenge to sustainable development. No longer is it merely within the domain of voluntary conduct on the part of corporations. Instead, it is a material financial risk that corporations encounter, thereby imposing duties on the boards of directors of corporations to recognise and address climate risk. In India, the jurisprudence in the context of section 166(2) of the Companies Act, 2013 suggests that directors ought to consider the long term interests of the company. The duty to act in the interests of the company would require directors to examine climate risk and engage in a balancing act between the long term sustainable value for the company as a whole on the one hand and any other interest, including their own, on the other. Practical manifestations of this duty would include making a detailed assessment of climate risk for their company, considering expert advice (where appropriate), determining strategies to address the risks, following through and implementing the strategies, and constantly reviewing the risks and updating the strategies and their implementation. Directors could be exposed to liability if they display conscious disregard or wilful neglect towards the associated financial risks arising from climate change. The Companies Act (in section 166(3)) also requires directors to act with reasonable care, skill and diligence. In addition, independent directors are subject to several specific duties, including risk management. Given that climate risk is not only a key risk for Indian companies, but is one that is gaining greater prominence over time, directors’ duties to account for climate risk can undoubtedly be determined against the aforesaid legal framework in India. Hence, directors of Indian companies cannot afford to ignore climate risk without exposing themselves to the risk of consequences for breach of directors’ duties. Even if they were to acknowledge climate risk, the competence duties they owe require them to make further investigations to obtain adequate information, to appoint experts and obtain their advice, and to oversee and supervise management to whom they may have delegated tasks for identifying, strategising and implementing a framework to address climate risk. Illustratively, this would include making appropriate levels of disclosure under recognised frameworks such as the Taskforce on Climate-related Financial Disclosures (‘TCFD’), undertaking scenario modelling to assess the viability of the business under different carbon price and temperature settings, and formulating strategies to ensure that the business of a company can sustainably operate in a net zero globalised economy. Both corporate law as well as securities law in India impose considerable disclosure obligations on directors of companies. Both bodies of law recognise the need for transparency regarding climate risk – as a matter of recognising and dealing with financial risk and also as a matter of non-financial disclosure. When a company is in the process of engaging in a securities transaction, disclosures are required to be made in a prospectus, giving rise to the risk of both criminal and civil liability for directors for misstatements. Secondary market disclosures require directors to disclose matters of climate risk in the annual reports, as well as on an ongoing basis in the case of material occurrences that impact the company’s business and finances, such as extreme weather events. Finally, as part of the annual reports, companies must specifically include business responsibility and sustainability reporting, of which the issue of climate change plays a crucial part. In all, directors of Indian companies bear the responsibility that their companies engage in climate risk disclosures through this multi-pronged approach, the failure of which would expose them to liability under both corporate and securities law. When it comes to enforcement mechanisms, shareholders have a number of avenues through which they can agitate claims for breach of directors’ duties to deal with climate risk, including to make adequate disclosures. These include both private enforcement measures as well as public ones. While the private enforcement tools seem wide in nature and, in certain cases such as class actions, wider than other Commonwealth jurisdictions, constraints, such as costs, delays and a lack of litigation funding mechanisms, may limit the effective use of such remedies. Even though the substantive law goes as far as requiring directors of companies to act in the interest of stakeholders, this provision is not justiciable by the stakeholders for whose benefit the directors are required to act. This is because duties are owed to the company, which only can bring an action. Even a derivative action or other forms of claims enumerated under the Companies Act can be brought only by shareholders. It remains unclear whether they can do so for anyone’s benefit other than their own.

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Conventional corporate law scholarship attributes a high degree of homogeneity to minority shareholders. For example, the agency problems approach identifies conflicts between shareholders and managers in the case of companies with dispersed shareholding, and conflicts between minority shareholders and controlling shareholders for companies with concentrated shareholding. However, recent trends establish that minority shareholders come in different hues. Large institutional investors have mostly crowded out retail shareholders from the stock markets. Even within the institutional variety, differences abound. The current corporate governance paradigm fails to account for the diversity among minority shareholders and their interests.In this chapter, I seek to establish that the assumptions regarding the homogeneity of minority shareholders are no longer valid due to market developments that have radically altered minority shareholder demographics in companies the world over. I argue that the expanding schism between the identity, outlook, actions and interests of varieties of minority shareholders creates agency problems among types of minority shareholders. This calls for a paradigm shift in corporate law’s treatment of minority shareholders. The ability of one type of minority shareholders to affect the interests of others would call for the imposition of restraints on minority shareholder behaviour.

The goal of this paper is to unpack the shareholder remedies of oppression, prejudice and mismanagement under sections 241 and 242 of the Companies Act, 2013 Act (the “2013 Act”). While this legislation substantially tracks its predecessor in the form of sections 397 and 398 of the Companies Act, 1956 (the “1956 Act”), it has also deviated, and that too in material fashion, on some counts. The 2013 Act has the effect of both expanding as well as contracting the shareholder remedies. The upshot of this paper is that section 241 of the 2013 Act considerably expands the scope of the remedy, thereby ensnaring within it conduct that was previously excluded. By introducing the concept of “prejudice” caused to a member as objectionable conduct apart from “oppressive” behaviour, Parliament has arguably lowered the standard of conduct that a petitioning shareholder must satisfy before it can revoke the remedy. However, by remaining steadfast in its insistence that petitioners must satisfy the requirement that there must exist grounds for “just and equitable” winding up of a company, no matter what the nature of the conduct of the offending shareholders, section 242 of the 2013 Act retains a considerable burden on petitioning shareholders. The 2013 Act, therefore, offers a mixed bag.

This is the Introduction to a volume containing select blog posts in the form of articles that have been curated and edited from the IndiaCorpLaw Blog. The volume is divided into 11 parts, comprising Company Law, Corporate Governance, Securities Regulation, Mergers and Acquisitions, Corporate Finance and Banking, Corporate Insolvency, Foreign Investment, Competition Law, Law of Contracts, Trusts and Unjust Enrichment, Taxation and Dispute Resolution.

In the backdrop of the convergence–divergence debate, the goal of this article is to examine the proliferation of corporate governance codes in the light of a single factor, namely varying corporate ownership structures across countries. While such codes emanated and became popular in the United Kingdom where companies largely display dispersed shareholding, the concept has been disseminated to countries that carry considerably different ownership structures, i.e. mainly concentrated shareholding. This is bound to give rise to incongruities in the implementation of these codes. In order to enunciate the claim made above, the article will consider two aspects that convergence advocates have focused on, namely (i) shareholder empowerment and (ii) self-regulation. For example, corporate governance codes place considerable emphasis on the structure and independence of the boards of directors of companies as a means to ensure shareholder protection. While this approach is meant to produce results in companies with dispersed shareholding, the same cannot be said of companies with concentrated shareholding where the empowerment of shareholders through director independence or other means would only embolden the already dominant controlling shareholders. Moving to self-regulation, a voluntary code operating on a ‘comply-or-explain’ basis can ensure sufficient adherence only if certain factors are present in the jurisdiction where it is applied. Relying upon available empirical evidence, this article finds that use of self-regulation in voluntary codes of corporate governance may generate different results depending upon the ownership structures of companies, thereby exhibiting signs of divergence on this count.

The World Bank’s influential Doing Business Report (DBR) has been a key platform for the American-driven dissemination of global norms of good corporate governance. A prominent part of the DBR is the related party transactions (RPT) index, which ranks 190 jurisdictions from around the world on the quality of their laws regulating RPTs. According to the RPT Index, the regulation of RPTs in Commonwealth Asia’s most important economies is stellar. In the 2018 RPT Index, Singapore ranked 1st, Hong Kong and Malaysia tied for 3rd, and India came in at 20th. However, despite the uniformly high RPT Index scores in all of Commonwealth Asia’s most important economies, empirical, case-study, and anecdotal evidence overwhelmingly suggests that there are in practice significant inter-jurisdictional and intra-jurisdictional differences in the actual function and regulation of RPTs in Commonwealth Asia.In this article, we assert that the conspicuous gap between what the RPT Index suggests should be occurring and what is actually occurring in Commonwealth Asia exists because it fails to capture the complexity of RPTs in three respects, which we term: (1) regulatory complexity; (2) shareholder complexity; and, (3) normative complexity. First, it appears that the RPT Index overly emphasizes the role played by a jurisdiction’s formal corporate and securities laws in determining the effectiveness of its RPT regulation, and it fails to pay due regard to its corporate culture and rule of law norms in determining the efficiency of its RPT regulation. Second, the RPT Index erroneously assumes that controlling shareholders are a homogeneous group driven by similar incentives. Third, the general assumption that RPTs per se are evidence of defective corporate governance and that stricter regulation of RPTs consequently equates to “good law” is erroneous. Demonstrating the frailties of the RPT Index is important in practice because jurisdictions – especially developing ones – commonly look to the DBR and its indices when reforming their laws. In addition, the RPT Index is built on some of the most influential research in the field of comparative corporate law, which makes our challenge to the validity of the RPT Index academically significant.

The World Bank’s influential Doing Business Report (DBR) has been a key platform for the American-driven dissemination of global norms of good corporate governance. A prominent part of the DBR is the related party transactions (RPT) index, which ranks 190 jurisdictions from around the world on the quality of their laws regulating RPTs. According to the RPT Index, the regulation of RPTs in Commonwealth Asia’s most important economies is stellar. In the 2018 RPT Index, Singapore ranked 1st, Hong Kong and Malaysia tied for 3rd, and India came in at 20th. However, despite the uniformly high RPT Index scores in all of Commonwealth Asia’s most important economies, empirical, case-study, and anecdotal evidence overwhelmingly suggests that there are in practice significant inter-jurisdictional and intra-jurisdictional differences in the actual function and regulation of RPTs in Commonwealth Asia. In this article, we assert that the conspicuous gap between what the RPT Index suggests should be occurring and what is actually occurring in Commonwealth Asia exists because it fails to capture the complexity of RPTs in three respects, which we term: (1) regulatory complexity; (2) shareholder complexity; and, (3) normative complexity. First, it appears that the RPT Index overly emphasizes the role played by a jurisdiction’s formal corporate and securities laws in determining the effectiveness of its RPT regulation, and it fails to pay due regard to its corporate culture and rule of law norms in determining the efficiency of its RPT regulation. Second, the RPT Index erroneously assumes that controlling shareholders are a homogeneous group driven by similar incentives. Third, the general assumption that RPTs per se are evidence of defective corporate governance and that stricter regulation of RPTs consequently equates to “good law” is erroneous. Demonstrating the frailties of the RPT Index is important in practice because jurisdictions – especially developing ones – commonly look to the DBR and its indices when reforming their laws. In addition, the RPT Index is built on some of the most influential research in the field of comparative corporate law, which makes our challenge to the validity of the RPT Index academically significant.