Prof Arjya B. Majumdar teaches corporate law related subjects at the Jindal Global Law School, OP Jindal Global University. Between 2007 and 2013 he was a corporate transactions attorney advising large corporates and the Govt of India on matters relating to M&A, JVs and PE, capital markets and foreign investments. He turned to academia in 2013. In terms of his research, Majumdar works on corporate social responsibility, crowdfunding and cryptocurrency, having published a number of books and articles in these areas. He has also been a visiting research fellow at the University of Liverpool, the National University of Singapore and the University of Melbourne. He is presently working on an empirical analysis of negotiated PE rights in Indian companies.
While Private Equity (“PE”) funding is a preferred vehicle for corporate growth in India, due to ... more While Private Equity (“PE”) funding is a preferred vehicle for corporate growth in India, due to the ubiquitous role played by company promoters, extant laws, and a complex regulatory and compliance environment, PE funds prefer to take up a minority shareholding in Indian companies. As a result, PE funds invest in Indian companies in exchange for participation in the company’s profits either through equity or convertible preferred stock or convertible debt. The PE fund typically also requires a number of investor control rights negotiated as part of the investment, keeping in mind concerns related to minority shareholding in India. While these contractual rights typically do not interfere with the day-to-day management of the company, they serve as a check and balance against promoter opportunism. These rights include provisioning for the investor to participate in the governance of the company through board nomination, quorum requirements and veto powers. Investors may also require...
University of Pennsylvania Journal of International Law, 2020
While Private Equity ("PE") funding is a preferred vehicle for corporate growth in India, due to ... more While Private Equity ("PE") funding is a preferred vehicle for corporate growth in India, due to the ubiquitous role played by company promoters, extant laws, and a complex regulatory and compliance environment, PE funds prefer to take up a minority shareholding in Indian companies. As a result, PE funds invest in Indian companies in exchange for participation in the company's profits either through equity or convertible preferred stock or convertible debt. The PE fund typically also requires a number of investor control rights negotiated as part of the investment, keeping in mind concerns related to minority shareholding in India. While these contractual rights typically do not interfere with the day-today management of the company, they serve as a check and balance against promoter opportunism. These rights include provisioning for the investor to participate in the governance of the company through board nomination, quorum requirements and veto powers. Investors may also require downside protection in the form of anti-dilution and pre-emptive exit rights and preferred payments upon liquidation. However, the nature of these investor control rights are departures from the default provisions under Indian company law. These rights, which are borne out of a contractual arrangement between the investor and the company/ promoters, are also subject to Indian contract law under which, contracts in variation of applicable law are void. Additionally, due to excessive delays in the Indian judiciary, any disputes that may arise are not referred to the courts, but are privately arbitrated or settled. Consequently, the enforceability of these contracted rights have never been tested in court. This paper seeks to qualitatively identify the investor control rights typically negotiated by PE funds using a sample of 158 privately held Indian companies which have received investments from non-Indian PE funds in the last five years. This paper will go on to analyse the limitations that Indian corporate and contract law place upon parties' freedom to contract, thus raising the question as to whether the rights negotiated by PE investors are enforceable at all. It is hypothesized that some of these rights may not be enforceable in their customary form.
Corporate Regulations, RGNUL Book Series on Corporate Law and Corporate Affairs , 2016
The concept of a class action suit emerged in United States of America in the early 18th century.... more The concept of a class action suit emerged in United States of America in the early 18th century. This course of litigation grew in popularity with an increasing number of claimants seeking restitution and often retribution under Rule 23 of the United States Federal Rules of the Civil Procedure for sundry claims ranging from corporate fraud to air flights delay. In the aftermath of the collapse of Satyam Computer Services Limited, Clause 217, providing the right of members or creditors to file an application before the NCLT on behalf of the all members/ creditors in the event that the management of the company was being conducted in a manner prejudicial to the interests of the company or its members or creditors, assumed greater importance as a redressal mechanism separate from the traditional oppression and mismanagement application. This provision was enacted as Section 245 of the Companies Act, 2013. There has been little scholarly debate on Section 245 primarily due to its unfamiliarity on Indian shores. However, it is necessary to critically examine this provision in order to ascertain its fallacies, if any, and suggest amendments if necessary. This chapter is divided into three broad sections. The first section provides a brief background on the origin of the class action suits in India and briefly describes the events concerning Satyam in December 2008. The second section enumerates the lacunas and fallacies of the said provision, also discusses how this provision may be misused by shareholders and creditors. The third section provides recommendations in order to make the provision on class action suits effective and efficacious in the India.
The well-being of generations yet to come must necessarily be an important concern for the presen... more The well-being of generations yet to come must necessarily be an important concern for the present. As an extension of Rawls' 'just savings' principle, one of the arguments for sustainable development is that of intergenerational equity-the idea that future generations must have the same access to natural resources as the present generation. In this article, I attempt to reconcile the divergent positions of the shareholder and stakeholder primacy debate by proposing that directors-acting for the corporation-should preserve intergenerational equity. Three arguments are presented in course of this proposition. Firstly, corporations are perpetual in nature and their continuing existence is predicated upon the ability of individual owners to transfer their ownership. Second, directors have a higher fiduciary duty to the corporation and future shareholders, over that of present shareholders. Finally, in order to safeguard the interests of future shareholders, corporations must necessarily strive to preserve the natural and social environments upon which the future of the corporation and the wealth of future shareholders depend.
One of the causes for raised eyebrows to the Companies Act, 2013 is Section 135. The provision ma... more One of the causes for raised eyebrows to the Companies Act, 2013 is Section 135. The provision mandates companies meeting certain requirements to compulsorily contribute to corporate social responsibility (CSR) activities, or explain the failure to do so. While this has been the subject of an ongoing debate ever since the provision was suggested in 2009, the provision in question has been met with considerable resistance from the industry. Arguments against Section 135 range from specific critiques of the semantics of the statute to critiques of the failure of India as a welfare state altogether.
What this paper seeks is to attempt a definitive outline of the CSR law and practice in India, its roots in Hinduism, Buddhism and Islam, Gandhian philosophies and the pre-2013 position on CSR. It shall also attempt to provide a critical analysis of Section 135 of the Companies Act, 2013 and how the provision may be ignored, or worse—misused.
Three arguments are presented in this regard. Firstly, that Section 135 constitutes a departure from the accepted position that CSR needs to be imbibed into the business and management principles of a company and is heading towards a potentially destructive conversion of the principles of CSR into corporate altruism. Secondly, the provisions of Section 135 make the Board of Directors liable to show to their shareholders—the compliance of the company’s social responsibilities. Instead, if the company is to have and comply with social responsibilities, the same should be ascertained by the society, or at least a representative of society. Finally, there is a slew of extant laws in India which also mandate certain companies to take into account their social responsibilities.
In the aftermath of the 2008 financial crisis, small businesses found it increasingly difficult t... more In the aftermath of the 2008 financial crisis, small businesses found it increasingly difficult to raise funds. As a response, equity crowdfunding has emerged as a viable alternative for sourcing capital to support innovative, entrepreneurial ideas and ventures. A number of securities regulators across the world have dealt with, or are in the process of dealing with, equity crowdfunding as a disruptive innovation to established processes of corporate fundraising. However, most equity crowdfunding regulations do not take into account one critical aspect of crowdfunding-that of cross-border crowdfunding. Using a comparative analysis of a number of jurisdictions around the world in their treatment of equity crowdfunding, this chapter argues that in jurisdictions where crowdfunding activities are unregulated or have a low threshold of regulations, the opportunities arising from the resultant regulatory arbitrage could then be used by fund-seeking companies based in jurisdictions where crowdfunding is prohibited or highly regulated.
Mergers and Acquisitions, A Comprehensive Step by Step Guide, 2013
Parties to a merger or an acquisition may have their own ideas as to how the transaction is to be... more Parties to a merger or an acquisition may have their own ideas as to how the transaction is to be structured or carried out, or the rights and obligations of each party. However, in order for the transaction to be enforced or upheld in a court of law, thereby giving each party the assurance that the transaction itself would not be rendered immaterial, certain laws that are applicable to each transaction must be adhered to. In this chapter, we discuss the scope and applicability of some of these laws and the potential legal obstacles that may arise in course of mergers and acquisitions in India.
While Private Equity (“PE”) funding is a preferred vehicle for corporate growth in India, due to ... more While Private Equity (“PE”) funding is a preferred vehicle for corporate growth in India, due to the ubiquitous role played by company promoters, extant laws, and a complex regulatory and compliance environment, PE funds prefer to take up a minority shareholding in Indian companies. As a result, PE funds invest in Indian companies in exchange for participation in the company’s profits either through equity or convertible preferred stock or convertible debt. The PE fund typically also requires a number of investor control rights negotiated as part of the investment, keeping in mind concerns related to minority shareholding in India. While these contractual rights typically do not interfere with the day-to-day management of the company, they serve as a check and balance against promoter opportunism. These rights include provisioning for the investor to participate in the governance of the company through board nomination, quorum requirements and veto powers. Investors may also require...
University of Pennsylvania Journal of International Law, 2020
While Private Equity ("PE") funding is a preferred vehicle for corporate growth in India, due to ... more While Private Equity ("PE") funding is a preferred vehicle for corporate growth in India, due to the ubiquitous role played by company promoters, extant laws, and a complex regulatory and compliance environment, PE funds prefer to take up a minority shareholding in Indian companies. As a result, PE funds invest in Indian companies in exchange for participation in the company's profits either through equity or convertible preferred stock or convertible debt. The PE fund typically also requires a number of investor control rights negotiated as part of the investment, keeping in mind concerns related to minority shareholding in India. While these contractual rights typically do not interfere with the day-today management of the company, they serve as a check and balance against promoter opportunism. These rights include provisioning for the investor to participate in the governance of the company through board nomination, quorum requirements and veto powers. Investors may also require downside protection in the form of anti-dilution and pre-emptive exit rights and preferred payments upon liquidation. However, the nature of these investor control rights are departures from the default provisions under Indian company law. These rights, which are borne out of a contractual arrangement between the investor and the company/ promoters, are also subject to Indian contract law under which, contracts in variation of applicable law are void. Additionally, due to excessive delays in the Indian judiciary, any disputes that may arise are not referred to the courts, but are privately arbitrated or settled. Consequently, the enforceability of these contracted rights have never been tested in court. This paper seeks to qualitatively identify the investor control rights typically negotiated by PE funds using a sample of 158 privately held Indian companies which have received investments from non-Indian PE funds in the last five years. This paper will go on to analyse the limitations that Indian corporate and contract law place upon parties' freedom to contract, thus raising the question as to whether the rights negotiated by PE investors are enforceable at all. It is hypothesized that some of these rights may not be enforceable in their customary form.
Corporate Regulations, RGNUL Book Series on Corporate Law and Corporate Affairs , 2016
The concept of a class action suit emerged in United States of America in the early 18th century.... more The concept of a class action suit emerged in United States of America in the early 18th century. This course of litigation grew in popularity with an increasing number of claimants seeking restitution and often retribution under Rule 23 of the United States Federal Rules of the Civil Procedure for sundry claims ranging from corporate fraud to air flights delay. In the aftermath of the collapse of Satyam Computer Services Limited, Clause 217, providing the right of members or creditors to file an application before the NCLT on behalf of the all members/ creditors in the event that the management of the company was being conducted in a manner prejudicial to the interests of the company or its members or creditors, assumed greater importance as a redressal mechanism separate from the traditional oppression and mismanagement application. This provision was enacted as Section 245 of the Companies Act, 2013. There has been little scholarly debate on Section 245 primarily due to its unfamiliarity on Indian shores. However, it is necessary to critically examine this provision in order to ascertain its fallacies, if any, and suggest amendments if necessary. This chapter is divided into three broad sections. The first section provides a brief background on the origin of the class action suits in India and briefly describes the events concerning Satyam in December 2008. The second section enumerates the lacunas and fallacies of the said provision, also discusses how this provision may be misused by shareholders and creditors. The third section provides recommendations in order to make the provision on class action suits effective and efficacious in the India.
The well-being of generations yet to come must necessarily be an important concern for the presen... more The well-being of generations yet to come must necessarily be an important concern for the present. As an extension of Rawls' 'just savings' principle, one of the arguments for sustainable development is that of intergenerational equity-the idea that future generations must have the same access to natural resources as the present generation. In this article, I attempt to reconcile the divergent positions of the shareholder and stakeholder primacy debate by proposing that directors-acting for the corporation-should preserve intergenerational equity. Three arguments are presented in course of this proposition. Firstly, corporations are perpetual in nature and their continuing existence is predicated upon the ability of individual owners to transfer their ownership. Second, directors have a higher fiduciary duty to the corporation and future shareholders, over that of present shareholders. Finally, in order to safeguard the interests of future shareholders, corporations must necessarily strive to preserve the natural and social environments upon which the future of the corporation and the wealth of future shareholders depend.
One of the causes for raised eyebrows to the Companies Act, 2013 is Section 135. The provision ma... more One of the causes for raised eyebrows to the Companies Act, 2013 is Section 135. The provision mandates companies meeting certain requirements to compulsorily contribute to corporate social responsibility (CSR) activities, or explain the failure to do so. While this has been the subject of an ongoing debate ever since the provision was suggested in 2009, the provision in question has been met with considerable resistance from the industry. Arguments against Section 135 range from specific critiques of the semantics of the statute to critiques of the failure of India as a welfare state altogether.
What this paper seeks is to attempt a definitive outline of the CSR law and practice in India, its roots in Hinduism, Buddhism and Islam, Gandhian philosophies and the pre-2013 position on CSR. It shall also attempt to provide a critical analysis of Section 135 of the Companies Act, 2013 and how the provision may be ignored, or worse—misused.
Three arguments are presented in this regard. Firstly, that Section 135 constitutes a departure from the accepted position that CSR needs to be imbibed into the business and management principles of a company and is heading towards a potentially destructive conversion of the principles of CSR into corporate altruism. Secondly, the provisions of Section 135 make the Board of Directors liable to show to their shareholders—the compliance of the company’s social responsibilities. Instead, if the company is to have and comply with social responsibilities, the same should be ascertained by the society, or at least a representative of society. Finally, there is a slew of extant laws in India which also mandate certain companies to take into account their social responsibilities.
In the aftermath of the 2008 financial crisis, small businesses found it increasingly difficult t... more In the aftermath of the 2008 financial crisis, small businesses found it increasingly difficult to raise funds. As a response, equity crowdfunding has emerged as a viable alternative for sourcing capital to support innovative, entrepreneurial ideas and ventures. A number of securities regulators across the world have dealt with, or are in the process of dealing with, equity crowdfunding as a disruptive innovation to established processes of corporate fundraising. However, most equity crowdfunding regulations do not take into account one critical aspect of crowdfunding-that of cross-border crowdfunding. Using a comparative analysis of a number of jurisdictions around the world in their treatment of equity crowdfunding, this chapter argues that in jurisdictions where crowdfunding activities are unregulated or have a low threshold of regulations, the opportunities arising from the resultant regulatory arbitrage could then be used by fund-seeking companies based in jurisdictions where crowdfunding is prohibited or highly regulated.
Mergers and Acquisitions, A Comprehensive Step by Step Guide, 2013
Parties to a merger or an acquisition may have their own ideas as to how the transaction is to be... more Parties to a merger or an acquisition may have their own ideas as to how the transaction is to be structured or carried out, or the rights and obligations of each party. However, in order for the transaction to be enforced or upheld in a court of law, thereby giving each party the assurance that the transaction itself would not be rendered immaterial, certain laws that are applicable to each transaction must be adhered to. In this chapter, we discuss the scope and applicability of some of these laws and the potential legal obstacles that may arise in course of mergers and acquisitions in India.
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Papers by Arjya B Majumdar
What this paper seeks is to attempt a definitive outline of the CSR law and practice in India, its roots in Hinduism, Buddhism and Islam, Gandhian philosophies and the pre-2013 position on CSR. It shall also attempt to provide a critical analysis of Section 135 of the Companies Act, 2013 and how the provision may be ignored, or worse—misused.
Three arguments are presented in this regard. Firstly, that Section 135 constitutes a departure from the accepted position that CSR needs to be imbibed into the business and management principles of a company and is heading towards a potentially destructive conversion of the principles of CSR into corporate altruism. Secondly, the provisions of Section 135 make the Board of Directors liable to show to their shareholders—the compliance of the company’s social responsibilities. Instead, if the company is to have and comply with social responsibilities, the same should be ascertained by the society, or at least a representative of society. Finally, there is a slew of extant laws in India which also mandate certain companies to take into account their social responsibilities.
What this paper seeks is to attempt a definitive outline of the CSR law and practice in India, its roots in Hinduism, Buddhism and Islam, Gandhian philosophies and the pre-2013 position on CSR. It shall also attempt to provide a critical analysis of Section 135 of the Companies Act, 2013 and how the provision may be ignored, or worse—misused.
Three arguments are presented in this regard. Firstly, that Section 135 constitutes a departure from the accepted position that CSR needs to be imbibed into the business and management principles of a company and is heading towards a potentially destructive conversion of the principles of CSR into corporate altruism. Secondly, the provisions of Section 135 make the Board of Directors liable to show to their shareholders—the compliance of the company’s social responsibilities. Instead, if the company is to have and comply with social responsibilities, the same should be ascertained by the society, or at least a representative of society. Finally, there is a slew of extant laws in India which also mandate certain companies to take into account their social responsibilities.