The Corporate Nexus
Corporate governance in transition — law, accountability and the future of business. Editorial picks, simplified concepts, recent judgements and the month in corporate law news.
In this issue
Editor’s Desk
Corporate Governance in Transition: Law, Accountability, and the Future of Business
In today’s rapidly evolving corporate environment, law is no longer merely a mechanism of regulation; it has become a driving force shaping business ethics, accountability, and institutional responsibility. As companies navigate increasing scrutiny from regulators, investors, and society, questions surrounding governance, transparency, and sustainable growth continue to gain significance.
This edition of The Corporate Nexus aims to explore these pressing developments through a range of contemporary corporate law themes. The discussions in this issue highlight the complex relationship between legal compliance and effective corporate functioning.
The issue also simplifies key legal concepts such as mergers and acquisitions, as well as insolvency and bankruptcy, enabling readers to engage with foundational principles that continue to influence modern commercial transactions. Further, our coverage of recent judicial pronouncements reflects the judiciary’s evolving approach towards insolvency resolution, creditor protection, and corporate structures. The Supreme Court’s observations on corporate guarantees and lifting the corporate veil underscore a broader movement towards substance over procedural technicalities in commercial adjudication.
At its core, this newsletter seeks to encourage reading of the dynamic intersection of law, governance, and business practice. In a time where legal developments increasingly shape economic realities, informed discourse becomes essential not only for legal professionals and scholars but also for businesses and policymakers alike.
At CCLG, our objective remains to foster informed dialogue and encourage deeper engagement with contemporary issues in corporate law and governance. We hope this edition provides valuable insights, sparks critical thought, and contributes meaningfully to ongoing conversations in the field.
Happy reading!
Editorial’s Pick
Two papers worth your time
Abstracts reproduced from the published papers — follow the links to read in full.
Enforcing Good Deeds: Investment Efficiency of Indian Firms Going Through CSR Law
“With the enactment of the 2013 government mandate, Indian corporations meeting specific criteria no longer have the discretion to forgo CSR expenditures. Previous studies have reported negative capital market reactions to this regulatory intervention. In contrast, our study offers a long-term perspective on the impact of the CSR law on firms’ investment efficiency. Using a difference-in-differences framework, this study examines publicly listed Indian firms from 2011 to 2018, capturing a clean pre- and post-mandate window that isolates the structural impact of the CSR law while excluding confounding shocks such as the COVID-19 crisis. We find that the CSR law leads to an increase in the investment efficiency of affected firms, driven primarily by reductions in agency conflicts and information asymmetry. This effect is more pronounced among firms with a strong presence of active monitoring groups, such as promoters and institutional investors. Improved efficiency is also profound among firms located in areas with a lower Human Development Index and Gender Diversity Index. Our findings demonstrate the positive impact of mandatory CSR law and present insights for policymakers and regulators as ESG and CSR mandates are increasingly debated and adopted.”
Read the paper (opens in a new tab)Does Audit Committee Quality Enhance Firm Performance within a New Corporate Law?
“The present study considers the policies and amendments as per the enactment of the Companies Act, 2013 in India regarding the audit committee measures, whether the companies abide by the amendments, and what impact it has on firm performance. As per earlier studies, the audit committee quality has a positive impact on firm performance. The methodology adopted includes ordinary least squares regression techniques with the fixed effect model and random effect model. The results state that the audit committee measures follow the norms as per the Companies Act, 2013, thus maintaining audit committee quality, but the audit committee quality does not enhance firm performance — because incorporation, functioning and implementation of audit committee measures at the ground level is not up to the mark till present. Moreover, the presence of Big 4 auditors as clients improves the accounting measures of firm performance and does not hold good for market measures, thus stating that Big 4 auditors are performing their audit duties very well but lack in improvising shareholders and managers regarding the financial statements of the companies.”
Read the paper (opens in a new tab)Corporate Vocabulary
Seven terms, plainly put
- BootstrappingRunning a startup using personal funds instead of external investment.
- Burn rateThe speed at which a startup spends money.
- Convertible debt securitiesFinancial instruments that begin as debt — bonds or debentures — but carry an option to be converted into equity shares of the issuing company at a later stage.
- EquityOwnership in a company; a kind of share capital. A person holding equity is essentially a part-owner of the company.
- Institutional investorsLarge entities such as mutual funds, pension funds, banks and insurance companies that pool money to make substantial investments in companies.
- SecuritiesFinancial instruments that represent ownership, debt, or a right to ownership or debt in a company — for example, shares and debentures.
- Share swap ratioThe proportion in which shares of one company are exchanged for shares of another during a merger.
Law Simplified
Two distinctions worth getting right
Mergers v. Acquisition
Companies Act, 2013 — ss. 232 and 233
A merger between companies happens by absorption: Companies A and B merge to form Company AB. Think of morning assembly lines at school — a shorter line (S) merged into a line of decent strength (D) makes SD.
Amalgamation is when two companies mix to form a new company: A and B mix to form C. In an acquisition, one company takes over another.
M&A transactions involve significant legal and commercial complexities — regulatory approvals (CCI, NCLT, SEBI), valuation disputes, tax implications under the Income Tax Act, and due diligence risks such as undisclosed liabilities. Cross-border transactions add further layers involving foreign exchange laws and approvals under FEMA.
Insolvency v. Bankruptcy
Insolvency and Bankruptcy Code, 2016
Insolvency is a financial condition in which a person or company is unable to pay its debts when they become due, or where liabilities exceed assets. It shows financial distress and involves no legal declaration.
Bankruptcy is a formal legal status declared by a court, where an insolvent person or entity is officially recognised as unable to repay debts and a legal process begins for repayment or discharge.
In India both are governed by the IBC, 2016: companies go through a resolution process, while individuals may be declared bankrupt. Insolvency is the situation; bankruptcy is the legal solution to that situation.
Judgements
From the Supreme Court
State Bank of India v. Doha Bank Q.P.S.C.
2026 SCC OnLine SC 722
The Supreme Court clarified the legal status and enforceability of corporate guarantees within the framework of the Insolvency and Bankruptcy Code, 2016, significantly strengthening the position of financial creditors in insolvency proceedings. The dispute arose during the corporate insolvency resolution process of Reliance Infratel Ltd., where a consortium of banks led by the State Bank of India claimed creditor status on the basis of corporate guarantees executed by the corporate debtor. Doha Bank challenged the validity of these guarantees, alleging lack of disclosure, improper verification, suspicious timing and insufficient stamping. Both the NCLT and NCLAT accepted these objections and denied the consortium’s status as financial creditors.
Reversing these findings, the Court held that liabilities arising from corporate guarantees squarely fall within the definition of “financial debt” under Section 5(8) of the IBC. It reaffirmed that a guarantor’s liability is coextensive with that of the principal borrower, and thus enforceable in insolvency proceedings. Non-disclosure of guarantees in financial statements does not invalidate them, and defects in stamping are curable and do not render an instrument void. Relevant documents can be produced even at the appellate stage, and procedural irregularities cannot defeat substantive rights. The Court found the tribunals’ conclusions perverse, particularly in ignoring admitted execution of guarantees and proper verification by the resolution professional.
Accordingly, the Court set aside the orders of the NCLT and NCLAT, recognised the consortium as financial creditors, and directed reconstitution of the Committee of Creditors. The judgment is significant for reinforcing a substance-over-technicality approach in insolvency law, providing much-needed clarity on the treatment of corporate guarantees and enhancing creditor confidence within India’s insolvency regime.
Alpha Corp Development Pvt. Ltd. v. Greater Noida Industrial Development Authority
2026 SCC OnLine SC 806
The Supreme Court delivered an important ruling on the applicability of the doctrine of lifting the corporate veil in insolvency proceedings under the IBC, 2016. The case arose from the CIRP initiated against Earth Infrastructures Ltd. (EIL), a real estate developer whose housing projects had stalled, severely affecting thousands of homebuyers. The central issue was whether the assets and leasehold rights of EIL’s subsidiary companies could be treated as part of the insolvency resolution process of the holding company. The NCLAT had held they could not, as the subsidiaries were separate legal entities and the leased lands belonged to them rather than to EIL.
Reversing this approach, the Court held that the case warranted lifting the corporate veil. EIL exercised complete control over the subsidiaries, financed the projects, undertook development activities and functioned as the real driving force behind them, while the subsidiaries merely acted as “front entities”. The assets and development rights connected with the subsidiaries could therefore be considered within the scope of EIL’s CIRP to ensure effective resolution and completion of the projects.
The Court further emphasised that insolvency law must adopt a pragmatic and homebuyer-centric approach, especially in real estate matters where rigid adherence to corporate separateness could frustrate resolution and prejudice innocent homebuyers. It restored the resolution plans approved by the NCLT and permitted the successful resolution applicants to proceed with completion of the stalled projects — recognising that, in exceptional circumstances, the corporate veil may be lifted during CIRP to prevent abuse of corporate structure.
News
The month in corporate law
Contributors
This issue was put together by
The Corporate Nexus is published by the Centre for Corporate Laws and Governance, Dharmashastra National Law University, Jabalpur. Queries and contributions: cclg@mpdnlu.ac.in