Reflecting on a transformation


The Delhi Metro, which has just reached Gurgaon, is probably the most visible symbol of change in India’s dynamic capital city

With over a million commuters riding its 100 trains each day, there is little else that has touched the lives of so many. Cities across the country are looking to copy it. If they succeed, they will not only have widened access to efficient public transport, but also transformed urban India.

Earlier this month the government announced equally transformational measures aimed at modernizing the country’s capital markets (see Cover story, page 17). The proposals, which will require at least 25% of every listed company to be publicly held, have significant implications for listed companies, including those that are almost entirely government owned and others that are Indian subsidiaries of foreign multinationals.

Leader 1006The rationale behind the move is to ensure higher standards of corporate governance and more broad-based decision-making. However, as our coverage reveals, many observers have questioned how the measures will be implemented. There are also fears that there is insufficient liquidity in the market to support the wave of new share offerings that will undoubtedly occur as companies strive to comply with the new requirements.

Among the principal beneficiaries of the change will be the country’s law firms, many of which are already beefing up their capital markets capabilities in anticipation of a boom in demand. But are today’s young lawyers up to the task?

Writing in this month’s Vantage Point (For profit or for principle?, page 23), Anand Desai, the managing partner of DSK Legal, expresses concerns that the country’s law schools are not imparting the values and work ethics that are essential traits of successful lawyers. He argues that many of today’s young lawyers “never realize the thrills of legal practise”, but are instead motivated by financial returns. Desai observes that India has been fortunate in attracting a renewed flow of talent to its legal profession. However, he cautions that there is a need for young lawyers to develop the right values and work ethics if they are to emulate the great stalwarts of the profession. Thought-provoking comments that will no doubt trigger further debate.

Another subject that has often attracted lively debate is dispute resolution, particularly the relative merits of arbitration as opposed to domestic litigation. In one of this issue’s Spotlight features (Settling for less?, page 28), Nish Shetty, a partner at Clifford Chance in Singapore, evaluates the pros and cons of the two methods. Shetty’s analysis is a must-read for the legal heads of all companies that are contemplating entering into relationships with Indian partners. He cautions that while India’s overburdened courts may not be an attractive option for foreign investors, attempting to resolve a dispute through arbitration may come with its own risks.

One business arrangement that has given rise to more than its fair share of commercial disputes is the joint venture. This previously popular investment vehicle has witnessed a lull in recent years, but due in part to heightened caution and financial prudence on the part of investors, it may be poised for a revival (Sharing the spoils or spoiling the shares?, page 24). While outlining the regulatory restrictions and approvals required for such investments, our coverage examines the risks and rewards associated with joint ventures. It also investigates why such arrangements have fractured in the past and identifies practical steps investors can take, not only to maximize the chances of success, but also to protect themselves in the event of a breakdown.

As any foreign investor knows all too well, repatriating funds from an investment in India can be a frustrating process fraught with regulatory hurdles and restrictions. Nishant Parikh, Siddharth Sharma and Meghana Singh of Trilegal get to grips with the problem and offer some incisive advice to investors in this month’s What’s the deal? (Cash trapped, page 31). They examine the current limitations on the movement of capital, many of which stem from India’s unique partial-convertibility status, and highlight effective exit strategies for parties keen to get their money out.

In this month’s Intelligence report (page 33), India Business Law Journal is pleased to present its fourth annual survey of the top international law firms for India-related work. The global financial storm wrought havoc on foreign law firms. In its wake, we discover that the international legal landscape for India has changed markedly. Several new firms have joined our rankings, while others have consolidated or refocused their practices and lost prominence on the India stage. As in previous years, our coverage reveals the top 10 foreign firms for India-related work, as well as 15 key players and a further 15 significant players. It also highlights a range of other firms – including specialist and regional law firms – that in-house counsel would do well to keep within their sights.

Change, it seems, is the only constant for those involved in the business of law and the law of business in India. Indeed, India Business Law Journal is celebrating its third anniversary of analyzing and interpreting the transformation. Since its launch in June 2007, the journal has endeavoured to demystify the challenges of complex transactions, scrutinize the details of legislative developments and provide otherwise-unavailable insight and intelligence to our readers around the world.

As we embark on our fourth year of publication, we would like to extend our sincere thanks to all those who have shared our journey so far: our readers, our contributors, our advertisers, our correspondent law firms and our editorial board members. We look forward to being of service to all of you in the year ahead.