COURSE MANUAL

COMPANY LAW II

Spring 2024

Course Instructors:

Anindita Jaiwal
Anubha Gupta
Arunima Saraf
Chetna
Eysha Marysha
Kavya Lalchandani
Meghmala Mukherjee
Mukesh Arora
Pallavi Rajpal
Sakshat Bansal
Saurabh Sood
Surbhi Kapur
Varsha Gaikwad
 TABLE OF CONTENTS

PART I

General Information ……………………………………………………………. 3

PART II

A. Course Description …………………………………………………………. 4

B. Course Aims ………………………………………………………………... 4

C. Intended Leaning Outcomes ………………………………………………. 5

D. Grading of Student Achievement …………………………………………... 5–6

PART III

A. Keyword Syllabus …………………………………………………………... 8

B. Course Policies …………………………………………………………....... 8–9

PART IV

A. Weekly Course Outline ……………………………………………………... 10 – 14

B. Readings ……………………………………………………………………. 14 - 15

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 PART I
General Information

General Information on, Company Law II, offered by Jindal Global Law
School
of the AY 2023-24

The information provided herein is by the Course Coordinator. The following information
contains the official record of the details of the course.

This information shall form part of the University database and may be uploaded to the
KOHA Library system and catalogued and may be distributed amongst Law students for
B.A.LL.B. (Hons), B.B.A.LL.B. (Hons); B.Com. LL.B. (Hons), B.A. (Hons) Legal Studies,
LL.B.; LL.M. courses if necessary.

Course Title: Company Law II

Course Code: L-CT-0036

Course Duration: One Semester

Number of Credit Units: 4

Level: B.A. LL.B. (Hons) & B.B.A. LL.B. (Hons)

Medium of Instruction: English

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 PART II

A. COURSE DESCRIPTION

The Company Law courses are primarily intended to familiarize students with the
Companies Act, 2013 (and may incidentally also, touch upon SEBI laws). While business
entities and activities are generally regulated through a large swathe of laws, this course is
concerned with regulation that is specific to this business form, the company. It therefore,
focuses on developing a deep understanding of the structural features of the modern
corporation. As earlier, legal personality and limited liability remain important themes in
understanding the principles that have been developed for the regulation of corporations.
However, while the first half of the course dealt largely with the transferable share and
investor ownership, this second half will focus more on understanding the full implications
of separation of ownership and management. A large portion of the course will therefore,
deal with the management of the company and the rules that have been evolved to minimize
the agency costs that result from this separation between ownership and management. Here,
the students will also critically examine the manner in which the law on corporate
governance has evolved in recent times. Aside, the course also deals with the manner in
which the company interacts with other stakeholders. In the study of oppression and
mismanagement, mergers and amalgamations and winding-up, the students will note the
law remains somewhat cognizant of the manner in which companies affect creditors,
employees and the public at large.

Further, given that the Companies Act, 2013 is fairly new, the course will rely heavily on
case law that interprets similar provisions under the Companies Act, 1956. That apart,
company legislation in India has always borrowed significantly from its English
counterparts, for which reason, the course will also use English case law liberally. While
the course is aimed largely at introducing students to legal concepts, they can expect to
understand the commercial interests that underplay corporate transactions and develop
some familiarity with drafting and negotiating transaction documents.

B. COURSE AIMS

This course will:

• Provide familiarity with the provisions of the Companies Act, 2013 (and touch upon
certain other laws, such as SEBI regulations, Insolvency and Bankruptcy Code, 2016,
etc.).

• Develop an understanding of the structural features of a company.

• Develop an understanding of the interaction between the company and its

stakeholders.

• Develop an understanding of the rationale and policy implications of the law based
on which they may develop a critique of the law.

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C. INTENDED LEARNING OUTCOMES

TEACHING AND
COURSE INTENDED LEARNING ASSESSMENT
LEARNING
OUTCOMES AND WEIGHTAGE TASKS/ACTIVITIES
ACTIVITIES
By the end of the course, students should:
(i) have a sound understanding of 40% Lectures based on the Students’ ability to
the intricacies of the legislation reading materials, in- grasp and critically
and case law. class discussions and evaluate the topics /
tutorials. The manner issues discussed in the
(ii) be able to anticipate the manner 40%
and extent to which syllabus will be tested
in which courts will interpret
these methods are in the following ways:
and apply the law, and advise
employed will vary (i) End-semester
clients and draft corporate and
with each instructor. examination (50%).
transaction documents.
(ii) Internal assessment
(iii)have the tools to develop a 20%
(50%).
critique of the law.
The internal assessment
activities will vary with
each instructor. It may
involve a combination
of class tests, writing
assignments, and class
participation.
It may also, involve
class presentations,
moot court exercises,
drafting/negotiating
exercises.

D. GRADING OF STUDENT ACHIEVEMENT1, 2

To pass this course, students must obtain a minimum of 40% in the

cumulative aspects of coursework, e.g. moot, and final examination. End
of semester exam will carry 50 marks out of which students have to obtain
a minimum of 15 marks to fulfil the requirement of passing the course.

The details of the grades as well as the criteria for awarding such grades are provided
below.

1
Under extraordinary circumstances, the JGU Academic Council or the JGU Deans’ Council can
suspend Clause D or make it optional. If Clause D is suspended, the policy which will be framed by the
School based on the decision of the said bodies will supersede Clause D. However, whether a situation
is extraordinary or not will be decided by the said bodies only.

2
Due to the COVID 19 pandemic, the Office of Academic Affairs may suggest changes/amendments or
suspend certain policies relating to the number of assessments and other examination related
policies.

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LETTER GRADE PERCENTAGE GRADE DEFINITIONS
OF MARKS
O 80% and above Outstanding Outstanding
work with strong
evidence of
knowledge of the
subject matter,
excellent
organizational
capacity, ability
to synthesize and
critically analyse
and originality in
thinking and
presentation.
A+ 75 to 79.75% Excellent Sound knowledge
of the subject
matter, thorough
understanding of
issues; ability to
synthesize
critically and
analyse
A 70 to 74.75% Good Good
understanding of
the subject
matter, ability to
identify issues
and provide
balanced
solutions to
problems and
good critical and
analytical skills.
A- 65 to 69.75% Adequate Adequate
knowledge of the
subject matter to
go to the next
level of study and
reasonable
critical and
analytical skills.
B+ 60 to 64.75% Marginal Limited
knowledge of the
subject matter,
irrelevant use of
materials and
poor critical and
analytical skills.

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B 55 to 59.75% Poor Poor
comprehension
of the subject
matter; poor
critical and
analytical skills
and marginal use
of the relevant
materials.
B- 50 to 54.75% Pass “Pass” in a pass-
fail course. “P”
indicative of at
least the basic
understanding of
the subject
matter.

NEW COURSE LETTER GRADES AND THEIR INTERPRETATION

Letter Percentage Grade
Interpretation
Grade of Marks Points
Pass 1: Pass with Basic understanding of
P1 45 - 49 2
the subject matter.
Pass 2: Pass with Rudimentary
P2 40 - 44 1
understanding of the subject matter.
Fail: Poor comprehension of the subject
matter; poor critical and analytical skills
F Below 40 0
and marginal use of the relevant materials.
Will require repeating the course.
‘P’ represents the option of choosing
between Pass/Fail grading system over the
CGPA grading system in the COVID 19
P Pass semester in Spring 2020. The option is
provided when students attain a minimum
of 40 percentage marks under the current
grading structure in a given subject.
Extenuating circumstances preventing the
student from completing coursework
assessment or taking the examination; or
where the Assessment Panel at its
I Incomplete discretion assigns this grade. If
an "I" grade is assigned, the Assessment
Panel will suggest a schedule for the
completion of work, or a supplementary
examination.

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 PART III

A. KEYWORD SYLLABUS

Board of directors, management, rights and duties of directors, director liabilities,

independent directors, executive and non-executive directors, board committees, auditors,
related party transactions, insider trading, corporate borrowing, inter-company loans and
investments, debenture, minority protection, oppression and mismanagement, remedies
against oppression and mismanagement, compromises and arrangements, reconstruction,
and mergers, winding up.

B. COURSE/ CLASS POLICIES

A list of classroom policies, including the policy on laptops, cell phones and similar
gadgets shall be circulated by individual instructors to the class in the first week of the
semester.

Academic Integrity and Plagiarism

Learning and knowledge production of any kind is a collaborative process. Collaboration

demands an ethical responsibility to acknowledge who we have learnt from, what we have
learned, and how reading and learning from others have helped us shape our own ideas.
Even our own ideas demand an acknowledgement of the sources and processes through
which those ideas have emerged. Thus, all ideas must be supported by citations. All ideas
borrowed from articles, books, journals, magazines, case laws, statutes, photographs, films,
paintings, etc., in print or online, must be credited with the original source. If the source of
inspiration of your idea is a friend, a casual chat, something that you overheard, or heard
being discussed at a conference or in class, even they must be duly credited. If you
paraphrase or directly quote from a web source in the examination, presentation or essays,
the source must be acknowledged. The university has a framework to deal with cases of
plagiarism. All forms of plagiarism will be taken seriously by the University and prescribed
sanctions will be imposed on those who commit plagiarism.

Disability Support and Accommodation Requirements

JGU endeavours to make all its courses accessible to students. In accordance with the
Rights of Persons with Disabilities Act (2016), the JGU Disability Support Committee
(DSC) has identified conditions that could hinder a student’s overall well-being. These
include physical and mobility related difficulties, visual and hearing impairment, mental
health conditions and intellectual/learning difficulties e.g., dyslexia, dyscalculia. Students
with any known disability needing academic and other support are required to register with
the Disability Support Committee (DSC) by following the procedure specified at
https://jgu.edu.in/disability-support-committee/

Students who need support may register any time during the semester up until a month
before the end semester examination begins. Those students who wish to continue
receiving support from the previous semester, must re-register within the first month of a
semester. Last minute registrations and support might not be possible as sufficient time is
required to make the arrangements for support.

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The DSC maintains strict confidentiality about the identity of the student and the nature of
their disability and the same is requested from faculty members and staff as well. The DSC
takes a strong stance against in-class and out-of-class references made about a student’s
disability without their consent and disrespectful comments referring to a student’s
disability.

All general queries are to be addressed to disabilitysupportcommittee@jgu.edu.in

Safe Space Pledge

This course may discuss a range of issues and events that might result in distress for some
students. Discussions in the course might also provoke strong emotional responses. To
make sure that all students collectively benefit from the course, and do not feel disturbed
due to either the content of the course or the conduct of the discussions. Therefore, it is
incumbent upon all within the classroom to pledge to maintain respect towards our peers.
This does not mean that you need to feel restrained about what you feel and what you want
to say. Conversely, this is about creating a safe space where everyone can speak and learn
without inhibitions and fear. This responsibility lies not only with students, but also with
the instructor.

P.S. The course instructor, as part of introducing the course manual, will discuss the scope
of the Safe Space Pledge with the class.

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 PART IV

A. WEEKLY COURSE OUTLINE

WEEK TOPIC ESSENTIAL READING

1 - Agency problem – MODULE 1: INTRODUCTION

- Corporate governance – - Agency Problems, Legal Strategies And Enforcement, John Armour, Henry Hansmann, Reinier
Kraakman
- Corporate Governance in India: Law and Practice, Umakanth Varottil & Richa Naujoks (Pages 1
– 10)

SUPPLEMENTARY READINGS:
Corporate Governance in India - The Transition from Code to Statute, Umakanth Varottil
Corporate Governance in the Age of Pandemic, Umakanth Varottil
Value Creation and Corporate Governance, Steen Thomsen

2–7 - Appointment and removal of MODULE 2: MANAGEMENT AND CORPORATE GOVERNANCE

directors
Fiduciary Duty of Directors/ Role of Directors:
- Independent directors
- Percival v. Wright, (1902) 2 Ch 421
- Role of directors
- Ferguson v. Wilson, (1866) 2 Ch App 77: 15 LT 230
- Duties of directors
- Peskin v. Anderson, (2001) 1 BCLC 372
- Liabilities of directors
Duty towards Shareholders
WEEK TOPIC ESSENTIAL READING
- Board meetings - Reliance Natural Resources v. Reliance Industries Ltd., (2010) 7 SCC 1
- Board committees - Globe Motors ltd. v. Mehta Teja Singh & Co., (1984) 55 Com Cases 445 (Del)
- Powers and restrictions on the - Dale & Carrington v. Prathapan, (2005) 1 SCC 212
board
Duty towards Stakeholders
- Interested directors
- Tristar Consultants v. V. Customer Services India P. Ltd., (2007) 78 CLA 365 (Del)
- Related party transactions
Proper Purpose Rule
- Managerial personnel
- Howard Smith Ltd v. Ampol Petroleum Ltd, [1974] A.C. 821
- Eclairs Group v. JKX Oil, [2015] UKSC 71
Diversion of Corporate Opportunity
- Regal (Hastings) Ltd v. Gulliver, [1967] 2 A.C. 134 HL
- Vaishnav Shorilal Puri v. Kishore Kundan Sippy, (2006) 6 Comp LJ 74 (Bom)
- Bhullar v Bhullar, [2003] EWCA Civ 424, [2003] BCC 711
- Foster Bryant Surveying Ltd v Bryant, Savernake Property Consultants Ltd, [2007] EWCA Civ
200, [2007] BCC 804
- Industrial Development Consultants Ltd v Cooley, [1972] 1 WLR 443
Business Judgment
- Cede & Co. v. Technicolor, Inc, 634 A.2d 345, 361 (Del. 1993)
Board Meetings:
- Maharashtra Power Development Corporation v. Dabhol Power, (2004) 120 Com Cases 560
(Bom)
- T.M. Paul (Dr.) v. City Hospital (P.) Ltd., (1999) 97 Com Cases 216

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WEEK TOPIC ESSENTIAL READING

SUPPLEMENTARY READINGS:
- BTI 2014 LLC v. Sequana SA and ors., [2022] UKSC 25
- Shlensky v Wrigley, 237 NE 2d 776 (Ill. App. 1968)
- Madhu Ashok Kapur v Rana Kapur, 2015 SCC Online Bom 5818
- Codification of Directors’ Duties: Is Common Law Excluded?
- “Directors’ Duties and Liabilities in the New Era”, NSE Quarterly Briefing No.5 (April 2014)]
- Directors’ Liabilities and Indemnification, J Sagar Associates (2017)
- Remedies against Directors' Undue Gains: Personal or Proprietary?
- Independent Directors: A test of competence, J Sagar Associates (2020)
- Umakanth Varottil, Evolution and Effectiveness of Independent Directors in Indian Corporate
Governance
- SEBI Order in the Satyam Case
- Tabrez Ahmad et al, “Satyam Scam in the Contemporary Corporate World: A Case Study in
Indian Perspective”, IUP Journal, 2010
- John R. Kroger, Enron, Fraud and Securities Reform: An Enron Prosecutor's Perspective
- Umakanth Varottil, A Cautionary Tale of the Transplant Effect of Indian Corporate Governance,
21(1) NLSI Review 1 (2009)
- Arjya B. Majumdar, “Corporate Governance in India and China – Towards Convergence”
- SM Bainbridge, “The Business Judgement Rule as Abstention Doctrine" (2004) 57 Vanderbuilt
Law Review, 83

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WEEK TOPIC ESSENTIAL READING
- The Stakeholder Approach Towards Directors’ Duties Under Indian Company Law: A
Comparative Analysis, Mihir Naniwadekar & Umakanth Varottil

7-8 - Insider
- Price sensitive information MODULE 3: INSIDER TRADING
- SEBI (Prohibition of Insider Trading Regulations) 1992
- SEBI (Prohibition of Insider Trading) Regulations 2015, as amended in 2022
- V.K. Kaul v. SEBI, (2012) 116 SCL 24
- Mrs. Chandrakala v. SEBI, Appeal No. 209 of 2011
- Rakesh Agarwal v. SEBI, (2004) 1 CompLJ 193 SAT (India)
- SEBI vs. Abhijit Rajan, Civil Appeal No. 563 of 2020
- Shruti Vora v SEBI 2022 SCC OnLine SEBI 1524
SUPPLEMENTARY READINGS
- Prateek Bhattacharya, India’s Insider Trading Regime: How Connected are you?
- Umakanth Varottil, Due Diligence in Share Acquisitions: Navigating the Insider Trading Regime

9 – 10 - Compromises and arrangements MODULE 4: CORPORATE RESTRUCTURING

- Amalgamation - Miheer H. Mafatlal v. Mafatlal Industries Ltd., (1996) 87 Com Cases 792 (SC).
- Squeeze-out provision - Hindustan Lever Employee’s Union v. Hindustan Lever Ltd., (1995) 83 Com Cases 30.

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WEEK TOPIC ESSENTIAL READING
- Public interest
SUPPLEMENTARY READINGS
- Wiki Kids Ltd. and Ors. vs. Regional Director, South East Region and Ors. (21.12.2017 - NCLAT)
MANU/NL/0228/2017

11-13 - Foss v. Harbottle rule, along with MODULE 5: OPPRESSION & MISMANAGEMENT
its exceptions
- Foss v. Harbottle, (1843) 2 Hare 461
- Oppression and mismanagement
- Tata Consultancy Services Limited Vs. Cyrus Investments Pvt. Ltd. and Ors., (2021) 9 SCC 449
- Class actions (Paragraphs- 2.5 to 2.13, 3.1, 3.2, 4.9, 9.1, 15.27, 16.1 to 16.3, 16.8 to 16.11, 16.13, 16.16, 16.23
to 16.31, 16.38, 16.42, 16.49 to 16.51, 17.7 to 17.9, 17.11 to 17.14, 17.17, 17.18, 17.33 to 17.35,
18.4 to 18.7, 19.6, 19.9, 19.17, 19.20, 19.21, 19.25, 19.31, 19.35, 19.43 to 19.47, 19.49, 20.33,
20.40)
- Menier v. Hooper’s Telegraph Works Ltd., (1874) 9 Ch. App. 350
- Rajahmundry Electric Supply Co. v. Nageshwara Rao, AIR 1956 SC 213
- Shanti Prasad Jain v. Kalinga Tubes, AIR 1965 SC 1535
- Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd., (1981) 3 SCC 333

13-14 - Circumstances in which Company MODULE 6: WINDING-UP

may be Wound Up by Tribunal;
- Madhusudan Gordhandas & Co. v. Madhu Woollen Industries Pvt. Ltd., (1972) 42 Comp. Cas.
- Liquidator (Sections 275 & 276 of 125
the Companies Act, 2013);
- Innoventive Industries Limited v. ICICI Bank Limited, MANU/SC/1063/2017
- Effect of Winding Up Order;
- Mobilox Innovations Private Ltd vs Kirusa Software Private Ltd, Civil Appeal No. 9405 of 2017

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WEEK TOPIC ESSENTIAL READING
- Ranking of claims; and - CoC Essar Steel v. Satish Kumar Gupta, Civil Appeal No. 8766-67 of 2019
- Insolvency and Bankruptcy Code, SUPPLEMENTARY READING
2016 – Part II (Chapter II & III)
- Devas Multimedia Pvt Ltd v Antrix Corporation Ltd, 2023 1 Supreme Court Cases 216,

15 REVISION

RECOMMENDED BOOKS/ READINGS

(i) Essential Texts: The materials listed in the next part of the module.

(ii) Recommended Readings:

• A. Ramaiya, Guide to The Companies Act, 18th Edition, 2014 (Wadhwa & Company)

• M.C. Bhandari, Guide to Company Law Procedures, Vol.1, 22nd Edition, 2010 (Wadhwa & Company)

• Gower and Davis, Principles of Modern Company Law, 8th Edition, 2008 (Sweet and Maxwell)

• R.R. Pennington, Company Law, 2nd Edition, 2009 (Butterworths).

• S.M. Shah, Lectures on Company Law, 18th Edition, 2008 (Tripathi)

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(iii) Key Statutes:

• Companies Act, 2013

The list of publishers for Companies Act, 2013:

1. Professional Book Publishers (without short comments/notes)

2. Law and Justice Publishing Co. (without short comments)
3. Commercial Publishers (without short comments)
4. Lawmann’s (without short comments)
5. Law Literature Publications (without short comments)
6. Taxmann Publications (with short comments).
7. Universal Publications (with short comments).

• Reference to Companies Act, 1956 shall be made only if necessary;

• Relevant SEBI Regulations; and

• Insolvency and Bankruptcy Code, 2016.

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