India Business Law Journal – December 2012/January 2013

Can India regain a belief in itself ?

The year that is drawing to a close has witnessed periods of intense national introspection

The contemplation has been punctuated by heated discussions and demonstrations across India by an increasingly concerned urban middle class.

While the depth of the outpouring may point to increasing self doubt, the lukewarm response from the establishment to the episodes triggering the introspection is worrying. Are India’s leaders out of touch with the needs and aspirations of its people? Are they capable of providing answers for this complex dynamic democracy? Should investors looking to India as a stable and sound investment destination be concerned?

Some of these questions will no doubt be debated in the run-up to India’s next parliamentary election, due in 2014. Will this election see a transition of power to a younger political class that is more in tune with contemporary India? Such a succession should be planned for.

Corporate India, meanwhile, is grappling with succession issues of its own. The passing of the baton at Tata, with Cyrus Mistry taking over as chairman from Ratan Tata, is being followed with interest both within India and outside. Most observers have praised the orderly nature of the transition.

In the legal market succession issues have also risen to the fore. A generation of managing partners who set up new law firms or reinvented old ones in the wake of economic liberalization in the early 90s is heading towards retirement. What their firms will look like after they have gone depends in no small part on the succession plans that are put into place now.

As we reveal in this issue’s Cover story (Heir to the throne? law firms are responding to the challenge in different ways. At J Sagar Associates the retirement age for partners has been set out in a partnership deed. Accordingly, the firm’s founder, Jyoti Sagar, is to retire from the partnership in April. Even smaller firms such as Zeus IP, a Delhi-based boutique IP practice, have designed partnership policies to ensure growth at the top and a demand for the firm’s equity.

The success of such strategies is yet to be seen, but in a profession where personalities all too often take on greater prominence than the institutions behind them, succession planning is a tricky business.

In this issue’s Vantage point (India in 2013) prominent legal practitioners and in-house counsel anticipate the challenges and opportunities that India-focused businesses will face in the next 12 months. The tone is one of cautious optimism.

Zia Mody, the managing partner of AZB & Partners, believes India “will remain an interesting and compelling destination” for strategic M&A. However, she notes that the availability of funding will be a “major challenge for both domestic and international businesses”.

Speculating on the prospects for India’s banking sector, Pramod Rao, a partner at IndusLaw and a former legal counsel at ICICI Bank, says 2013 “promises to be a landmark year” in which new banking licences will be issued after a hiatus of seven or eight years.

The capital markets also appear to be poised for renewed activity. Bhavna Thakur, a director at Citigroup Capital Markets India, believes that “many quality issuers will be looking to raise growth capital” by tapping the markets in the first half of 2013. However, she asks if Indian companies might start looking to list elsewhere in the face of “tighter disclosure and compliance norms in India”.

Another issue that will affect India’s capital markets in 2013 is the looming deadline for complying with the country’s new public shareholding requirements (Lighting up the bourses). While some listed companies have already complied with the June 2013 deadline set by the Securities and Exchange Board of India, many others will be forced to increase their public shareholdings over the next few months. The offer for sale route has so far been the most popular path to compliance, but several other options are available and the in-house counsel of listed companies will need to weigh the pros and cons carefully.

An additional concern for many in-house counsel is the changing nature of their profession as they evolve from being business adjudicators to business facilitators. Nowhere is this transition more keenly felt than in the highly charged realm of dispute resolution, where in-house counsel are increasingly expected not only to deliver the desired result, but to do so in a timely manner despite operating in a judicial system that can be anything but timely.

In this issue’s Spotlight Ajit Yadav, the president and group general counsel at Vedanta Resources, and Ashok Sharma, the president of the Indian Corporate Counsel Association, talk in depth to India Business Law Journal’s editor Vandana Chatlani about these important challenges. Their candid, insightful and often controversial opinions make compulsive reading for any in-house lawyer with a professional interest in India.

As 2012 draws to a close, India Business Law Journal presents its annual coverage of the year’s most significant deals and disputes (Deals of the Year). Unlike in previous years, most of the featured deals were driven by a desire to take businesses forward rather than amass trophy assets. In showcasing these deals we once again celebrate the skill, innovation and practical expertise of the lawyers and law firms that brought each deal to fruition.

Clearly they have what it takes to overcome any challenges that lie ahead.