INDIA Law and Practice Contributed by: Raj Ramachandran and Krutamana Pisipati, JSA
11. Duties of Directors 11.1 Principal Directors’ Duties
2023 was recently notified but has not yet come into effect.
The duties of directors are contained in the Indian Companies Act, 2013, which inter alia include: • acting in accordance with the articles of asso- ciation of the company; • acting in good faith in order to promote the objectives of the company for the benefit of its members (including minority shareholders of the company); and • acting in the best interests of the company, employees, and the community. 11.2 Special or Ad Hoc Committees The board of directors are typically permitted to establish special or ad hoc committees. In line with Table F of the Indian Companies Act, 2013, (which is the model articles of association that a company can adopt), “the board of directors may delegate any of its powers to committees consisting of such member or members of its body as it thinks fit. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on it by the board of directors”. Some of the common committees that are formed are the audit committee, nomination and remuneration committee, stakeholders relation- ship committee, corporate social responsibility committee and/or investment committee. A director of a company who has a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company should disclose that and the director should not partici- pate in the matter. In certain cases, ad hoc com- mittees are constituted to deal with the conflicts involved.
10. Disclosure 10.1 Making a Bid Public
The issuer is required to make a public announce- ment in daily newspapers with a wide circulation within two days of filing the draft offer document with the SEBI. This announcement should dis- close the fact the draft offer document has been filed with the SEBI and invite comments. See 6.1 Stakebuilding and 6.2 Mandatory Offer . 10.2 Prospectus Requirements See 6.13 Securities Regulator’s or Stock Exchange Process . 10.3 Producing Financial Statements An acquirer (and any persons acting in concert) are required to make financial disclosures to the shareholders and the target company in the pre- scribed format. 10.4 Disclosure of Transaction Documents The public announcement has to include the nature of the proposed acquisition such as pur- chase of shares or allotment of shares, or any other means of acquisition of shares or voting rights in, or control over the target company. The detailed public statement pursuant to the public announcement should contain such infor- mation as may be specified in order to enable shareholders to make an informed decision with reference to the “open offer”. The public announcement and the detailed pub- lic statement should not omit any relevant infor- mation or contain any misleading information.
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