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Corporate law II (Compulsory paper)

Course Outline
Maximum Marks: 100

Semester VIII
Faculty: BRIJNATH

INTRODUCTION
This course is in continuation of corporate law-I (compulsory course) wherein various aspects
of company as an institution were discussed covering incorporation, corporate finances,
corporate management and corporate collapse.
In this course the focus will be on corporate mismanagement and restructuring which has
become a major concern for the corporate world. To prevent financial mismanagement the
Companies Act 2013 has made many changes in accounting and audit process. The
reconstruction of companies is one of the most important activity which is going in the world
at a large scale and hence the course has focused in detail the various aspects of
reconstruction and structuring. A well developed and well regulated securities market is a
sine qua non for meeting the growing financial requirements of the corporate sector. In order
to appreciate its niceties, besides Companies Act, other regulating statutes like SEBI Act,
Securities Contract (Regulation) Act, 1956 etc. and the guidelines issued thereunder will be
discussed. A special focus has also been given on foreign direct investments in India to
appreciate the need and growing importance of FDIs for Indian corporate sector. Besides that
the role of NCLT has become important and hence the same has also been touched upon.
With the withdrawal of the State and the consequent expansion of private sector along with
emergence of MNCs globally, every society (developed as well as developing) is concerned
about developing principles of good corporate governance and corporate social responsibility.
Both these concepts will conclude our discussions on corporate law (compulsory course).
SCHEME OF THE COURSE
Module
I
II
III

IV
V
VI
VII
VII
IX
X

Title
Corporate abuses and remedies
Accounts, audits and dividends
National Company Law Tribunal and Appellate
Tribunal
SURPRISE TEST ( First 3 Modules)
Corporate Reconstruction
Revival and Rehabilitation of Sick Companies
MID TERM EXAMINATION (First 5 Modules)
Securities and Exchange Board of India
Securities Market and its Control
Foreign Direct Investment in India
Corporate Governance
Corporate Social Responsibility
END TERM EXAMINATION ( All 10 Modules)

Total no. of class hours: 65

Class hours
03
04
01

30
05
04
04
04
05
05

EVALUATION
i)
Attendance
ii)
Research projects
iii)
Surprise Test
iv)
Mid Semester Examination
v)
End Semester Examination

:
:
:
:
:

TOTAL

:100

05
20
10
10
55

DETAILS OF THE COURSE OUTLINE


Module I
: Corporate abuses and remedies
Majority power and minority rights
Principle of non-interference (Rule established in Foss v. Harbottle)
Protection against oppression
Protection against mismanagement
Shareholder derivative action: Nature, scope and development
Power of tribunal
Cases:
Foss v. Harbottle (1845) Ch 319
Bhajekar v. Shinkar AIR 1934 Bom. 243
Scottish Co-op Whole Sale Society Ltd. v. Mayor (1958) 3 All E R 66
Shanti Prasad Jain v. Kalinga Tubes 1965 SC 1535
Raja Mundry Elect. Supply Corp. v. Nageshwara Rao AIR 1956 SC 213
Bajaj Auto Ltd. N.K. Firodia AIR 1971 SC 321
N.I.I.Ltd. v. N.I.N.I.H. Ltd. AIR 1981 SC 1298
Module II
: Accounts, audits and dividends
Accounts of Companies
Audits and Auditors
Declaration and Payment of Dividend
Module III

National Company Law Tribunal

Purpose
Composition
Procedure
Powers
Module IV
: Corporate Reconstruction
Mergers
Amalgamation
Acquisition
Takeover
Demergers
(Global and National scenario: Historical background; Meaning; Need; Scope; Methods)

Cases:
Hindustan Lever Employees Union v. Hindustan Lever Ltd. AIR 1995 SC 470
Miheer H. Mafatlal v. Mafatlal Inds. Ltd. AIR 1997 SC 506
Maharashtra Apex Corp. Ltd., In re. 2005 (124) Comp. Cases 637
Module V : Revival and Rehabilitation of Sick Companies
Existing Legislative framework and changes under Companies Act 2013
Takeover of sick companies
Reverse mergers
Cases:
Navnit R. Kamani and Ors. v. R.R. Kamani AIR 1989 SC 9
Salem Textiles Ltd v. Authorised Officer of Phoenix Arc P. Ltd. and others, (2013) 178 Comp
Cas 533 (Mad) FB
Module VI
: Securities and Exchange Board of India
Establishment and Jurisdiction
Role of SEBI in Capital Market
Powers and Functions
Securities Appellate Tribunal Establishment and Scope of Jurisdiction
Different Scams in Indian Securities Market Modus Operandi
Cases:
Swedish Match AB v. SEBI, India AIR 2004 SC 4219
Clariant International Ltd. v. SEBI AIR 2004 SC 4236
B.S.E. Brokers Forum, Bombay v. SEBI AIR 2001 SC 1010
Bombay Stock Exchange v.Jaya I. Shah AIR 2004 SC 55
Module VII
: Securities Market and its Control
Introduction to Capital Market Reforms and Development.
General concept of securities market products
Securities Contract Regulation Act, 1956
Concept of Corporatization and Demutualization
Stock Exchanges
Conditions of Listing and Delisting
Credit Rating Agencies Concept, Scope and regulatory framework
Concept of Dematerialization and Depositories
Cases:
Vinay Bubna v. Stock Exchange, Mumbai AIR 1999 SC 2517
Module VIII
: Foreign Direct Investment in India
Foreign Direct Investments: Meaning, concept and importance
Foreign collaboration and joint ventures
Foreign Institutional Investors
Module IX
: Corporate Governance
Evolution, scope and relevance of Corporate governance
Different system of corporate governance

Principles, policies and Best Practices


Legal reforms of corporate governance in India
Important Reports on corporate governance
Cadbury Report
Blue Ribbon Report
Sarbanes Oxley Act of USA
KMB, Naresh Chandra, Narayan Murthy and JJ. Irani Report,
Emerging trends in corporate governance and Clause 49 of Listing Agreement
Module X
: Corporate Social Responsibility
Meaning, Concept and Relevance
Historical backdrop/Theories
Challenges faced in evolution
Present position in India
CSR under Companies Act 2013 (S. 135)
CSR Audit
SUGGESTED READINGS:
1.
2.
3.
4.

A. Ramaiya Company Law Digest Volume - 2


Dr. N.V. Pranjape, The New Company Law
Gowers Principles of Company Law 8th Edition 2008, R. Cambray & Co. Pvt. Ltd
J. Fred Weston, Mark L. Mitchell, J. Harold Mulherin, Takeovers, restructuring, and
corporate governance
5. K.R. Sampath, Mergers, Amalgamations, Takeovers & Corporate Restructure
6. Kamal Gupta, CR Dutta on The Company Law
7. Michael J. Whincop, Corporate Governance in Government Companies
8. Palmers Company Law volume 2, 3
9. Roger Blanpain et al, Rethinking Corporate Governance: From Shareholder Value to
Stakeholder Value
10. S. K. Verma & Suman Gupta, Corporate Governance and Corporate Law Reform in
India. (2005)
11. S. Ramanujam, Mergers et al.
12. Saleem Sheikh & William Rees, Corporate Governance & Corporate Control
13. Smith and Keenans, Company Law (2002)
14. Sridharan & Pandian, Guide to Takeovers and Mergers
15. Suman Gupta: Shareholders Democracy: Fact or Fiction. (1992)

NOTE: Apart from the cases that have been mentioned above, the students
are advised to take note of other important cases mentioned in the books
and discussed in the class.