Foreign Direct Investment: The Conundrum Explained

By Bhumesh Verma, Managing Partner, Corp Comm Legal.

Foreign Direct Investment or FDI, as it is called in common parlance, has become the fuel which is essential to sustain and develop any country’s economy. Developing countries such as India, require significant and consistent infusion of foreign investments in their economy in order to maintain a high GDP rate. The demands of the ever-growing consumerist culture are also satiated by the influx of FDI. Sectors such as infrastructure, retail, aviation, pharmaceuticals, etc. require continuous cash flow for their sustenance. A liberal FDI regime allows companies existing within such sectors to look for financial assistance outside the country. This ensures that the country’s economic development does not suffer due to lack of financial resources within the country. The authors explain the essentials of the FDI regime in India through this article. (more…)

Importance of law firm internships in the life of a law student

By Akash Agarwal, Amity Law School, Noida.

Ignorance is the curse of God; knowledge is the wing wherewith we fly to heaven.-William Shakespeare

As rightly pointed out by the legend of literature that with the power of knowledge, one can have access to the doors of heaven. It is not only he, who recognised the importance and value of knowledge in the world, but several brilliant minds have also focused on its vitality and proficiency that it possess within itself. (more…)

Financial Restructuring: Issue of Corporate Debt

By Rajiv Kulkarni, IGNOU.

Financial restructuring is the rearrangement of a business assets and liabilities. The process is often associated with corporate restructuring where an organization’s overall structure and its processes are reanalyzed. It helps to improve the financial stability and increases in prospects for future growth and expansion. While financial restructuring relates to changes in the capital structure of the firm, it also ensures the fundamental change in a company’s business or financial structure with the motive of increasing the company’s value to shareholders or creditors. [1]Corporate restructuring is broadly divided into two parts: financial restructuring and operational restructuring. While financial restructuring relates to changes in the capital structure of the firm, operational restructuring relates to changes in the business model of a firm, with the aim of increasing overall shareholder value. Corporate financial restructuring not necessarily planed during crisis only but some cases, the process of restructuring takes place as a means of allocating resources to achieving growth both vertically and horizontally. (more…)

Corporate Sustainability: A New Kid on the Corporate Block

By Aashna Jain, National Law University, Jodhpur.

The objective of this write-up is to examine the concept of sustainable growth as the characteristic of the phenomenon called Corporate Social Responsibility. The researcher is not indulging in examining the widely discussed aspect of the features and the outcomes of the corporate social responsibility. The focus will primarily be on the various definitions given by national and international organizations, which primarily bring out the attribute of the sustainable growth and the care for future generations. (more…)

Constructing Indoor-Management: A Critical Analysis of the Doctrine of Constructive Notice

By Sudipta Bhowmick, KIIT School of Law, Bhubaneswar.

“When there are persons conducting the affairs of the company in a manner which appears to be perfectly consonant with the articles of association, those so dealing with them externally are not to be affected by irregularities which may take place in the internal management of the company.”[1]  Lord Hatherly 

For the incorporation of a company, Memorandum of Association[2] and Articles of Association[3] are two most important documents. While, the memorandum of a company is the  constitution/charter of a company, on the other hand, the articles of association enumerate claim the internal rules of the company under which it will be governed. Section 399[4] of the Companies Act, 2013 provides that the memorandum and articles when registered with  Registrar of Companies ‘become public documents’ and then they can be inspected by anyone on payment of a nominal fee. Therefore, any person who contemplates entering into a contract with the company shall be presumed to know the powers of the company and the extent to which they have been delegated to the directors. In other words, every person dealing with the company is presumed to have read these documents and understood them in their true perspective. This is known as the Doctrine of Constructive Notice. The rule of constructive notice extends not merely to Memorandum and Articles but also to all such documents as are required to be registered with the Registrar of Companies. There is however no constructive notice of documents which are filed with the Registrar of Companies for the sake of record only. (more…)

The Evolution of Corporate Social Responsibility

By Siddhant Sharma, Amity Law School, Jaipur.

The concept of Corporate Social Responsibility (CSR) has been around for quite some time now. The term itself means ‘corporate initiatives to assess and take responsibility for the company’s effects on the environment and impact on social welfare’. CSR may also be referred to as “corporate citizenship” and can involve incurring short-term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change.[i]  (more…)

The Companies (Amendment) Bill, 2014

By Sudipta Bhowmick, KIIT School Of Law, Bhubaneswar.

The new Companies Act, 2013 has been operationalized for only nine months, yet a new Companies Amendment Bill, 2014 has been passed by the Lower House on 17th December, 2014 to ‘ease the doing of business’. After the Companies Act, 1956, it took 57 years to replace the old one with new. Therefore, it has come as a great relief for corporates, auditors, shareholders who addressed their concerns regarding prolonged procedures, reporting of fraud etc. and saw them as amendments in this Bill. (more…)

Piercing of Corporate Veil

By Palak Pathak.

Piercing the corporate veil describes a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders or directors. Usually a corporation is treated as a separate legal person, who is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood, but in exceptional situations may “pierce” or “lift” the corporate veil. (more…)

An Expository Analysis of One Person Company Concept: Is it an Arrow shot in the Dark or is it Serving its Purpose?

By Aashna Jain, National Law University, Jodhpur.

The 1956 Act had been in need of a substantial revamp for quite some time to make it more contemporary and relevant to corporates, regulators and other stakeholders in India. The Companies Act, 2013 brought the much needed changes in the corporate arena. Amongst those major changes, the introduction of One Person Company (hereinafter referred to as O.P.C.) concept is a landslide shift in the conventional form of a company. It actually came into effect in the year 2014 after the publication.[1] (more…)