Many companies face a tricky situation on exec bonuses as new norms kick in
Top executives of listed companies face challenges over bonuses thanks to new disclosure norms implemented by the Securities and Exchange Board of India (Sebi). The new rules make minority shareholder approval mandatory for all bonuses paid to top executives on or after April 1.
However, companies pay bonuses with a lag – money received this financial year is for services rendered in the last one. Effectively, minority shareholder approval will be needed for bonuses promised to top officials in the last fiscal.
Also, top executives of several mid-cap companies are concerned about shareholder backlash since the stock performance of most has been poor in the past year. ET has confirmed the development with executive directors of two listed companies, both non-banking financial companies (NBFCs).
Legal experts say this is a one-time anomaly since the listed companies are geared to implement the new law from the current fiscal.
IBC, RESTRUCTURING & RELATED
MCA sees Rs 2.8 lakh cr recovery from IBC-led resolution process
Terming the current insolvency process and its outcomes as ‘super success, Ministry of Corporate Affairs sees total recovery amount touching Rs 2.8 lakh crore through resolutions with the settlement of two key accounts, including some others — Essar Steel, where financial creditors have approved the resolution and Bhushan Steel and Power.
“The 100 cases that have been settled through resolution accounts, Rs 1.8 lakh crore have been netted which is not a small amount and the accounts sitting on margin (Bhushan Steel and Power & Essar Steel), another Rs 1 lakh crore along with some other mid-sized resolutions can come, so Rs 2.8 lakh crore out of Rs 10 lakh crore of NPA that time is not a small amount, IBC is a super success”, says MCA senior officials on the insolvency processes
In case of Essar Steel, the CoC has approved the resolution process but the process got stuck after operational creditor Standard Chartered moved NCLAT for higher share from the funds. The debt-ridden steel firm had Rs 42,000 crore coming from the resolution plan of global steel major ArcelorMittal.
Creditors expect increase in realisations through IBC despite hiccups
Innumerable litigations, defiant promoters, failing sectors and over-burdened National Company Law Tribunals (NCLTs) have negatively impacted corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC) over the past two years, according to investment information and credit rating agency ICRA.
Still, the process has chugged on, albeit at a slower pace than envisioned. Till the close of the financial year 2018-19 on March 31, a total of 715 cases of defaulting corporate debtors had been closed under the IBC.
Of these, a significant portion of corporate debtors (378 cases) was ordered into liquidation while only 92 yielded a resolution plan where companies continue to operate as going concerns. During the last financial year, cases resolved under the IBC include Electrosteel Steel, Monnet Ispat Ltd and Amtek Auto Ltd.
NCLAT annuls lenders’ voting on NBCC’s bid to acquire Jaypee Infratech
The appellate bankruptcy court has asked Jaypee Infratech’s lenders to conduct afresh vote to decide on NBCC India’s bid for the realty developer, after annulling the process that had already begun.
The National Company Law Appellate Tribunal’s order on Friday came on a plea by IDBI Bank, a lender to Jaypee Infratech, seeking a stay or annulment of the voting process. A three-member bench asked the financial creditors to conduct fresh voting from May 31.
IDBI Bank had opposed the state-run building company’s bid for debt-hit Jaypee Infratech, terming it a conditional offer. The bench also allowed the company’s committee of creditors (CoC) to renegotiate the offer with the sole bidder, NBCC.
MSME & STARTUPS RELATED NEWS
73% of SMBs believe business is ready for AI: Study
SMBs in India scored high in artificial intelligence adoption compared to other countries, the third edition of the ‘Small and Medium Business Trends Report’ by Salesforce says.
Conducted online by the Harris Poll, the study surveyed over 2,000 small and medium business owners to understand the impact of technology in this segment. The top three tech priorities of growing SMBs included a CRM software (35%), financial software (34%) and technology services (28%), with ease of use (69%) and a trusted vendor (63%) being the key deciding factors, followed by price, simplicity of maintenance and speed and ease of setup.
Why MSMEs should treat Intellectual Property Rights as assets
Conventionally, Indian Micro, Small and Medium Enterprises (MSMEs) have relied on creating and protecting tangible assets-from land, machinery to office equipment-together with their revenue and receivables, to boost their valuation and prestige among their peers and in the industry. However, as per global experience, MSMEs have catapulted into the big league of large enterprises by transcending borders, that is, Multinational Corporations (MNCs), when they invest in creation and protection of intellectual properties (IP) and intellectual property rights (IPRs).
By creating monopolies globally, either by way of integrating businesses vertically or by creating intellectual property rights, these companies have achieved greater revenues and profits. The former method of obtaining monopoly in the marketplace is now regulated by governments in several countries by laws such as Competition Laws. However, IPRs remain a legal and much desired way of creating and enforcing monopolies in an industry or trade.
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