India Business Law Journal –  Dec 2019/Jan 2020

When families fail

Is all really fair in love and war?

When it comes to warfare between siblings, or in families, there is often little that is fair or reasonable. As seen in many a Bollywood movie, and within India’s political dynasties, family feuds often erupt without reason, and they can be bitter and long lasting.

But what of feuds within families and groups at the helm of companies? As seen in India, warfare between siblings and other individuals for control of corporate assets is brutal and can have adverse consequences for the businesses involved. In recent months at least three large corporate entities have been in the news as a consequence of boardroom battles – the most recent being the US$5 billion Chennai-based Murugappa Group, where there is an ongoing battle to obtain representation in the boardroom for female heirs.

Perhaps such warfare is inevitable, given that the majority of India’s companies are run by families. But is this ideal?

This issue’s Cover story highlights the on the ground reality within India, where high net-worth individuals (HNWIs), many of whom control companies and businesses, have been voting with their feet and shifting their capital overseas. This is not entirely new, but these individuals are now increasingly seeking professional advice as their efforts become more organized and sophisticated. Prominent private practice lawyers have seen their needs evolve as Western influence and concepts make an impact. “Trust structures, trust laws, trustee companies … everything in Europe is well oiled,” says Abhijit Joshi at Veritas Legal. “In India, it is evolving.”

Lawyers who are moving into this area of practice are discovering private clients come in all shapes and so, too, do their enquiries and motivations for wealth management advice.  The challenge is providing value to clients while remaining mindful of the particular stresses and strains that characterize the landscape in which these individuals have established themselves.

In Juggling act, we turn the spotlight on the emerging legal framework for personal data protection, which has arisen from the need to protect the interests of businesses, the government and the individual. India’s journey to a personal data protection law has its roots in the Aadhaar case, in which a nine-judge bench of the Supreme Court declared a right to privacy as a fundamental right. The court also ruled that data protection is a complex exercise that needs to balance privacy and other values, which subserve legitimate concerns of the state. How this is to be done is still being discussed. In December 2019, a significantly modified bill on this issue was introduced in the lower house of parliament.

This issue’s Vantage point presents the opinions of four in-house counsel who identify key risks and opportunities in the year ahead in the areas of technology, joint ventures, data protection and prevention of sexual harassment. The legal framework for addressing sexual harassment against women in the workplace is relatively new and is expected to bring about substantial change. However, Kuldeep Sharma, general counsel at Vishal Mega Mart, argues that people who are neither competent nor unbiased can find themselves on the all-important internal committees – constituted as part of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act – and tasked with judging whether an offence has been committed. This is hardly ideal.

Also in this compendium, K Satish Kumar, global head of legal and chief data protection officer at Ramco Systems, looks at the Personal Data Protection Bill, 2019, that is currently before parliament, and asks if industry can expect it to provide any relief.

Our Intelligence report analyses what might happen to India’s much-used insolvency code if state governments do not observe the order of priority for creditors over a corporate debtor’s assets. On account of a lack of case law precedent in this area, what if a state government were to seek higher rights while seeking the repayment of tax from a corporate debtor? We speculate on this, while observing that until parliament and state legislatures suggest and debate reforms, any deference provided to state governments during the insolvency process will undoubtedly throw the purpose and implementation of the code into uncertain territory.

Also in this issue, India Business Law Journal reveals the most significant deals and disputes of 2019 and the law firms that worked tirelessly to bring them to fruition (see Deals of the year). Choosing the deals has been an interesting exercise. While this has been a gloomy year for the economy, the government has been steadfast in its resolve to portray India as a place to do business.

Deal tracker Acuris notes there was a drop of about 50% in deal values in the past year and yet India remains a place where billion-dollar deals happen. We witnessed the US$12 billion merger of Gruh Finance and Bandhan Bank and UPL Corporation’s US$3 billion acquisition of Arysta LifeScience in 2019. These deals and many others benefited from expert advice from lawyers, both within India and outside, and we celebrate their expertise and experience.