One step forward two steps back?


Corporate activity is on the increase yet uncertainty persists

The Competition Commission of India is one among several agencies that are seeing evidence of an uptick in corporate activity. Ashok Chawla, the chairman of India’s antitrust regulator, remarked that the doubling of merger filings over recent months points to a vibrancy in the economy. There is also the makings of a capital markets revival of sorts, with the registrar of companies receiving 10 red herring prospectus filings in the first four months of 2015 – as compared with 14 in all of 2014.

LeaderBut none of this translates into an increased confidence in the regulatory and legal framework of India. There is much to be done on that front and voices both within and outside the country are beginning to question the lack of any real progress. While Prime Minister Narendra Modi continues to capture people’s imaginations, disillusionment with his government’s ability to move the country in the right direction is growing.

What will it take for the government to realize that neither investors, nor for that matter the large numbers of people who voted for the ruling party, can be taken for granted? The challenge of turning India around is great, but so also the country’s potential and promise.

This month’s Cover story provides an analysis of the challenges ahead for companies looking at domestic capital markets for fundraising opportunities. There is a growing interest in listing in India rather than overseas and while some companies, such as VRL Logistics, have been very successful, others are less so.

Failure to price an offering correctly is often seen as the cause of a lacklustre offering. In India, as Bhakta Patnaik, a partner at S&R Associates, says, part of the reason could be that some companies which may not be ready to go public are doing so as private equity investors want to exit. Many companies are not up to the challenge of meeting the exacting standards set by the Securities and Exchange Board of India and SEBI is aware that it needs to relax the process. Proposals to provide an online route for IPO subscriptions and reduce what Arka Mukherjee at J Sagar Associates calls “complex post-issue paperwork”, is good news for companies and their lawyers.

In Heading for cover there is more good news for companies using the services of Indian law firms, as we find lawyers are increasingly warming to the idea of paying for professional indemnity insurance. While India’s larger law firms, including (the former) Amarchand Mangaldas, AZB & Partners, Khaitan & Co, Luthra & Luthra, Trilegal, and Anand and Anand, have been covered for several years, the mid-size and smaller firms are increasingly seeing value in being insured, even if they are yet to obtain insurance. “Having professional indemnity insurance in the present times of public activism is relevant,” says Aseem Chawla, a partner at MPC Legal, which is “actively working” towards procuring insurance.

High premiums continue to be a concern, but as Praveen Gupta, managing director and CEO at Raheja QBE General Insurance Company, says, it may be just a matter of time before the pricing of the product gets “better adapted to the Indian market”. Will this convince more lawyers of the need to obtain cover? Perhaps not, as neither the Advocates Act, 1961, nor the Bar Council of India Rules makes this mandatory.

Writing in this month’s Vantage point Mysore Prasanna, a former general counsel at some of India’s larger companies, reflects on the legal and investment landscape in South India and provides advice on choosing advisers and partners. He notes that while legal practice in India is becoming more professional, not much regard may be given to issues such as conflict of interest. He believes that law firms should be upfront about such conflicts and refuse briefs if necessary. This may be an area where greater vigilance on the part of clients is needed.

Greater vigilance is also needed during criminal trials where there is a risk of media reports trampling on the fundamental rights of an accused and interfering with free and fair decision-making (Trial and error). This can be a tricky situation and is one that the Supreme Court is taking seriously. The court recently said it would consider framing guidelines for the media on covering criminal cases and briefings by investigative agencies. This would be welcome, for while freedom of expression remains important within a democratic society, it needs to be balanced against the right to a fair trial and privacy.

This month’s Intelligence report provides information that could help companies make better choices as they seek out legal advisers in India. Anecdotal evidence suggests that some of the country’s finest legal minds, whose expertise and experience is well attuned to the challenges of India, are to be found in smaller firms that dot the legal landscape. With this in mind, discerning clients often look beyond the big-name law firms. Our report introduces 50-plus small and mid-size law firms across India that add to the depth and diversity of services on offer.

After eight years of analysing and studying India’s legal market, India Business Law Journal is convinced that the quality of expertise on offer in India’s small and mid-size law firms deserves more attention.