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About bhumesh

Bhumesh Verma is Managing Partner of Corp Comm Legal, a Delhi-headquartered Law firm. He is a senior corporate lawyer and author. A law graduate from Campus Law Centre, Delhi University (1994), he started his career at Ajay Bahl & Co. (now part of AZB & Partners) and went on to become partner at some of the leading Indian law firms.

He was selected as a Chevening Scholar in 2000 by the UK government. During this scholarship, he studied at the College of Law at York and worked with a big London law firm.


Currently, he is ranked among Top 100 Indian Lawyers by Indian Business Law Journal (“IBLJ”).


He has advised clients from more than 50 countries on M&A, inbound and outbound FDI, incorporation of companies, regulatory approvals and compliances, joint ventures, financial and technical collaborations, private equity, venture capital, corporate and securities laws, commercial agreements, exchange control laws, structuring cross-border transactions and strategy on legal and business issues.


He is a keen reader, prolific speaker and writer. He has contributed to in-house journals of many international law firms on India law


He is guest faculty with law colleges and online legal education portals too and conduct workshops on corporate laws and drafting skills. 

ROAR

Separating Chairman…

From the business / management perspective, the two top posts of the Chairman and the Managing Director are very vital in any organization. Most of the executive powers may be concentrated in one or both of these positions.

Therefore, a state of conflict of interest may arise on concentration of powers associated with chairman and managing director positions in a single person. Power corrupts and absolute power corrupts absolutely – such concentration of powers can adversely affect the management of the company business and result in unlawful acts and downgrading the corporate governance standards at organizational level.

Therefore, engagement of different persons for such positions may be a more professional and correct strategy for administration/compliance/business convenience and most notably to dodge any conflict of interest (ownership vs management) at management level.

To avoid the side effects associated with the concentration of powers in a single person and as a part of revamping the corporate governance reforms, the Securities and Exchange Board of India (SEBI) has issued a directive ordering top 500 listed companies to make it a point to have separate personnel for the positions of chairman and managing director.

As a consequence, listed entities are barred from employing same person to perform the duties and observe the responsibilities assigned to chairman and managing director position.

With the target to comply with the SEBI directive, some of listed companies are in a hurry to promote their independent director (Director) to the chairman position. Such a move can prove to be counter-productive and won’t serve the real intent of the SEBI directive.

Typically, in a family promoted business the position of chairman and managing director are held by members of promoter family only. If absolutely necessary, the family may nominate a Director (who is close to promoter family, but designated as an independent director) to the Chairman position – it may assist the promoter family to keep a tight control over the management of the company’s operations.

Post such appointment, the independent director in his new role as the chairman  will remain to be part of the board in a non-executive role – by and large, the board composition will continue to be the same as engagement of Director as chairman won’t make any difference in the board management.

It is not just family promoted businesses but even also other companies who are mandated by law are mulling on elevation of Director to chairman status.

It is expected that the foregoing proposition will be integrated by listed companies into proposals to be discussed during the upcoming board meetings or annual general meetings scheduled for financial year 2019.

The SEBI directive will be forcing around 30-35 reputed companies (Piramal Enterprises, Lupin and Godrej Consumer Products, Reliance Industries, Adani Enterprises, etc.,) to reconstitute the composition of their respective boards by this fiscal end to be in compliance with the SEBI directive.

It is vital to establish a clear distinction of powers between different positions on the Board not just in letter but in spirit to preserve the economic interest of minority stakeholders as non-compliance of law in spirit could result in conflict of interest amid the majority/minority shareholders.

The real compliance with law by the company in its truest sense will be reflected in protecting the economic/business interest and legal rights of minority shareholders on equal footing with the interest/rights of the majority shareholders in real time.

Chairman/managing director position has an eminent role to play in the company management as chairman/managing director is empowered to eliminate a director from the board, to conduct board meetings, to carry / modify the meetings agenda and to monitor the business operations in regular course of business.

Given the significance of chairman/managing director role in the company management - The companies should employ different qualified and independent professionals for the chairman and managing director who are proficient in working without bias and perform their duties and responsibilities in a transparent manner for the well being of all stakeholders.

Employment of impartial and different persons as chairman and managing director will not only ensure companies conformity with the SEBI directive but also fortify the corporate governance standards of the company to next level and guarantee unbiased management of company business along with preserving the economic interest of majority/minority equally.

Government arming minority…

Minority shareholders are the foremost/worst victims of any unofficial/illegal/fraudulent act of the company management or majority shareholders.

There are certain existing laws which accord protection to legal rights/monetary interest of the minority investors. However, enforcement of these rights requires litigation or other legal proceedings - lack of funds is one of the reasons for minority investors’ inability to shield their legal rights with the succor of existing laws. Not all minority investors are financially well armored to file a class action suit to preserve their legal rights and economic interest in the company.

In this backdrop, the central government is working on formulation of a scheme to confer financial assistance on the minority shareholders who are filing class action suits pursuant to provisions of the companies’ law to ensure that the minority investors have not fall short of required financial support to preserve their legal rights.

In course of reinforcing the legal regime for protection of minority shareholders from the atrocities of majority shareholders, the Ministry of Corporate Affairs (MCA) is also taking measures to back up the investors to pursue the class action suits

The prospect of class action suit is the instance in which investors will be provided with a route to seek remedy as a group against the company for mismanagement of company business operations/unofficial siphoning of funds.

Pursuant to Section 245 of the Companies Act, 2013 investors are competent to instigate a class action suit against the company management provided that the management of company affairs or conduct of company business operations are executed in a manner detrimental to the economic interest of investors.

The underlying intent of the proposed scheme is to expedite minority investors to file class action suit by providing financial assistance via Investor Education and Protection Fund (IEPF).

Following the inception of the proposed scheme – Investors will be entitled to procure the reimbursement of legal expenses incurred for filing the class action suit.

IEPF authority will manage the IEPF which comes under the ambit of MCA. The corpus of IEPF is in excess of INR 4,000 crores.

The eligible parameters (minimum number of members, minimum shareholding/deposits) will soon be rolled out by the central government.

The primary reason for backing up the prospect of class action suit is repeated occurrence of fraudulent cases (involving unofficial siphoning of funds) causing monetary loss to investors and downgrading the corporate governance standards.

The proposed scheme will not only bolster investors to resort to class action suit but also provide the necessitated financial succor to ensure that no case of class action suit is being dropped on ground of lack of funds.

Several quarters including majority shareholders, auditors, credit rating agencies etc., would be exposed to class action suit for violating the legal rights of minority shareholders and unauthorized use of minority investors’ funds.

The scheme will certainly facilitate minority investors to pursue class action suit against the atrocities of company management and to defend their legal rights.

Companies should, therefore, be aware of the new weapon in the armor of the minority shareholders, mend their ways and conduct their business operations by striking right balance securing the respective rights and financial prospects of majority and minority shareholders – else the eventuality of class action suit looms large.

US companies to prefer…

Since the Indian economy was opened up for foreign investment in early 1990s, India is considered as a land of untapped business opportunities – the view has been consistently strengthened by progressive legal / business reforms embarked on by the central government. As a result, India has emerged as one of most favorable nations for foreign investors to invest in.

The central government has been making good noise constantly to transform the nation into hub of business opportunities for global companies, for example, by simplifying the process related to registration/incorporation of a company from time to time.

India is giving tough competition to developed nations in the World Bank Ease of Doing Business Report by improving its rankings year by year.

Another wonderful opportunity is around the corner for India to cement its place as one of the favorable nations for Ease of Doing Business – As per available media reports, 200 United States (US) based companies are planning to migrate their China based manufacturing units to India.

This is a reflection of multinational companies’ hunt for an alternative nation to China to strengthen their overseas business operations as China is losing its sheen as business destination for investors.

In a statement issued by US-India Strategic and Partnership Forum's (USISPF), US companies are in talks with USISPF in relation to establishment of an alternative option to China via investing in India.

USISPF would recommend to the new central government (which will hopefully be formed later this month) to pitch in more legal/business reforms in line with international standards and to take further measures to enhance transparency in decision-making process. 

USISPF is also pushing for execution of a Free Trade Agreement (FTA) between India and the US - An FTA with US will facilitate companies located in India and US to access and explore the financial prospects offered by the other nation business regime. It has established a high level manufacturing council with representatives from its member companies to prepare a document with a set of recommendations to assist the central government in understanding the real concerns of such companies and to address such concerns in amicable manner benefiting the central government and the companies.

Apparently, US companies are in strategizing to launch manufacturing operations in India and seek the resolution of certain issues to ease compliance burden on them post-completion of Indian general elections. Most of the companies are not only targeting to perform manufacturing operations in India but also aiming at exploration of the financial dimensions offered by the India’s business regime.

The monetary value of proposed investments that these companies could bring to India would be substantial. For a fact, over USD 50 billion have been invested by USISPF member companies during last four years.

It is time for the central government to leverage the aforesaid opportunity optimally by further rationalizing the legal/business reforms to accommodate global companies to invest more in India via easing the compliance burden on global companies.

An optimal exploitation of this opportunity will benefit India in multiple ways – It will:

·       Persuade more companies to initiate / strengthen their business operations in India.

·       Magnetize more investors (Regional/Foreign) to make investments in India.

·       Generate more employment opportunities and diminish the unemployment problem to a considerable extent.

·       Assist India’s transformation into a hub of business opportunities for investors / companies.

·       Augment the economic prospects of India and Indians at large.

Yesterday once more…

In this interview with Sweta (Author Tub.asia), Bhumesh Verma speaks about his enterprising Journey from the earlier days as a student, experiences on various assignments, starting up as an Independent practitioner, guiding and motivating people who have come along so far. A must read for all the budding lawyers looking forward to work with Law firms, Corporate and Legal Entrepreneurs 

 

  1. A quick Introduction?

Ans. My introduction is quite tricky. First things first, I am a law student with some experience. Then, my name is Bhumesh Verma which is quite unique (haven’t seen or known anyone else with this name). As for my role, I wear different hats for different people, you can say I have an MPD (multiple personality disorder). I am an (i) adviser-cum-friend-cum-partner for business associates and clients; (ii) helping hand-cum-mentor for startup founders; and (iii) friend, philosopher, guide, mentor and guest teacher for students.

  1. What is your success story?

I have no success story, only a story of determination, confidence, hard work and struggle.  I had no legal background or contacts in the profession. The profession was not as open for all 25 years back as it is today. Therefore, I always had to work harder than my peers to come up to expectations and not allowing myself to grow any complexes. Being an (obsessively) self-made man, I would accept nothing from parents and bought my first scooter with a loan from my office whereas some of my peers would come to office in chauffeur-driven cars at the beginning of their careers.

 

  1. So, how do you feel today after putting in these years in the profession?

Today I can bask myself in a little satisfaction that today, clients and professionals know me by my name and I do not require a big brand name behind me. This indicates that what I’ve been doing through years was right and professional.

 

  1. After a successful career with big law firms, why did you choose to venture into starting your own law firm?

There are broadly two types of professionals – those who dream and those who chase their dreams. 90% of professionals are happy and content being ‘workers’ and getting a good paycheque every month. Many of my peers were (and are) happy doing what they were assigned and as a result, have made multiple times the money compared to me and enjoyed benefits and luxuries that come along with a big brand name!

I, on the other hand, have been ambitious and been chasing my dreams throughout. Mere money (golden handcuffs, as I say) has not been able to restrict my ambitions or bought my contentment or loyalty. I always wanted to do more with life as each one of us has a very limited time on this planet. I’ve had the pleasure of working with some of the greatest Indian law firms, yet I wanted to do different things like teaching, writing, imparting knowledge. Some of this would be unconventional or even conflicting with one’s role as a partner in a law firm.

Therefore, I wanted a vehicle which I could run the way I want with flexibility as to fee structure, more personalized attention of partners to smallest of matters, customized offering to clients where they feel valued and not fleeced. In addition, it allows me to follow my passion for writing and giving some time to education.

  1. Tell us more about Corp Comm Legal.

Corp Comm Legal is a rare independent boutique-cum-full service law firm with non-exclusive relationships with several international law firms. We have a galaxy of Indian and foreign clients and we provide end to end advisory services pertaining to corporate/commercial, IPR, HR, litigation and so on. Every client is valued irrespective of the transaction and fee size and our aspiration are to be the firm of the first choice of our clients.

  1. How does it feel to be ranked among top lawyers and law firms in India?

As a principle, we do not pay for (i) publishing any of our articles or interviews; (ii) speaker slots by sponsoring any events; (ii) getting jury slots in moot courts or award functions and so on.

Still, if some publications or websites rank me or us among the top ones, it demonstrates a great confidence in us on part of the clients and global law firms we have been working with and we accept it with all humility.

Such recognition not only confers an honor on us but cast an obligation on us to be more sincere and honest in our efforts to make clients feel valued. We are nothing but the trustee for our clients.

 

  1. You are an author of a book “DRAFTING OF COMMERCIAL AGREEMENTS”- Please tell us about your book and how did you manage your time between writing a book and running a Law Firm?

There is a wide gap between the academic knowledge imparted at our law and management institutes and practical skillset required at the workplace (be it a law firm or a corporate house). Deal-making is integral to all corporate lawyers per se and non-lawyers in management positions. They all need to read, review, draft or negotiate (one or more of these) agreements. Even litigation lawyers require knowledge of agreements to come up with solutions for their clients. Therefore, all these require knowledge of drafting and review of agreements. However, I would always hear a complaint that there was no book which could explain these aspects in a simple language to lawyers and non- lawyers.  I then decided to put my experience and knowledge in writing.

So, this is a book that comes from my mind and heart. I kept typing my experiences at any point of non-office hours for about 6 months and then structured it in form of the book in a very simple language and conversation format on only drafting skills. No heavy and boring law teaching, just discussion about what to do (and not to do) while drafting or reviewing agreements.

No wonder, the book got an amazing response from students, lawyers, and non-lawyers. The second edition is in pipeline.

  1. And then, how did you get involved with legal education?

Well, I have been taking guest lectures on and off with law schools in India and abroad for few years. Once my friends in the academic community became aware that I was starting on my own, I was inundated with request for a more regular and formal role with some institutions. The underlying objective was to bridge the gap between academic knowledge and practical skills that exist in Indian law schools. Now, I am engaged with some premier law and management schools as guest faculty and am imparting practical skills pertaining to corporate laws, international contracting, business ethics and drafting skills.

Besides, I have also been approached by online education ventures to assist them in imparting online education.

This has opened floodgates for requests from websites imparting legal knowledge to contribute articles – now, I post 1 article on Linkedin and it may be republished by 5 websites! Such is the demand.

My contact base now consists of thousands of students from all over India, even abroad.

  1. Please tell us about Corporate Law in India: A General Mindset. Do you think companies are now more pro-active than reactive or still a long way to go?

Both legs of your question are correct. Certainly, companies are more pro-active than they were a decade or two back. Corporates used to wait for a dispute to go to a law firm. Now, many corporates engage law firms even before a preliminary discussion with a potential business associate and seek inputs for MOU, drafting, negotiation, closing and so on. They realize that a stitch in time saves a hundred later.

However, the situation is still far from optimal. Indian corporates have a long way to be fully vigilant about safeguarding their interests while entering any commercial relationships. Some of them still see legal costs as avoidable as much as possible, yet ready to spend many times to repair the damage caused due to such attitude later! Pennywise, pound foolish, goes the saying.

 

  1. Should Foreign Law firms be allowed to practice in India? What will you say to the corporates who may be are looking forward to this development?

My views are ambivalent. Entry of foreign law firms in India may help improvise the situation in terms of professionalization. Big Indian corporates are therefore likely to welcome this step and may also engage foreign firms in international matters or in high stake matters. However, an unrestricted entry may prove detrimental to the young lawyers from a non-creamy background who are already struggling to find employment.

Another aspect is the pricing. Indian clients are very cost sensitive – even Indian law firms face challenges in extracting a reasonable fee from them. Foreign firms may face competition in this regard within different foreign firms as well as from Indian firms. Therefore, I am not sure how foreign firms will sustain and survive in this competitive market.

 

  1. What is the one mistake you find that young lawyers make more often than others?

Shortcuts. One has to understand that all the role models achieved their success with hard work and long years of hard work, practice, and persistence. Today, cut-and-paste culture seems to have overtaken research-and-work culture.  Resultantly, the present generation is like instant noodles – in too much hurry. This reflects poorly on many aspects of their behavior and attitude. They should spend enough time under the sun to consider themselves to be authorities on their subject. Impatience is good as long as it results in your quest for knowledge. However, if you start cutting corners, it doesn’t do any good to anyone.

 

  1. In terms of Legal Essentials for a New venture/ Startup, what major advice you would like to give that majorly hits them at a success leap?

In the startup phase, many promoters do not appreciate the need for being legally compliant or careful in your dealings with your partners. Their argument is that we are too small to engage a consultant or we cannot afford the cost. However, this is precisely what causes them heavy penalties and/or despair, as the case may be, at a later stage.

If the venture is successful, there are many parents behind a success and profit sharing becomes a bone of contention in the absence of a well-crafted understanding. If the venture fails, it is an orphan no one wants to take care of – this causes friction among the promoters. So, basically, you have to safeguard your interests and limit your obligations to take care of either eventuality.

Even if you are a sole proprietor of a venture, you must ensure utmost compliance at all stages.

One must appreciate the logic behind ‘Prevention is better than Cure’.

Besides other advantages, good housekeeping helps when you are about to get your dream “Funding” and the investor wants to carry a due diligence over your affairs.

 

  1. Please share something about your family background, lifestyle and things that keep you going?

I come from a humble, non-legal background. My family has been the backbone for all my professional adventures and has always stood behind me for whatever steps I have taken. My parents are retired.

My wife is an electronics engineer turned teacher. She is passionate about disseminating education and even runs a blog to impart free electronics education without a revenue model!

My children are studying – not sure if any of them will take up law. However, they argue a lot with me and mostly win (sometimes with their mother’s support).

I try to lead a simple balanced life. No discussion about work at home and we try to have at least a meal together at night. We are very simple and grounded people. Therefore, any ups and downs (financial or otherwise) do not affect us too much and life goes on in this happy-peppy family.

The excitement of doing something new or different, meeting or speaking to some new client/student every day keeps me going.

 

  1. What was your highest point in life and what was your Lowest?

There have been many high points. Securing a British Chevening Scholarship in 2000, being recognized among Top 100 Indian Lawyers for a couple of years now (with clients’ and professionals’ nominations), Corp Comm Legal being recognized among Rising Stars within a year of setting up, and so on.

Another funny high point came when a student in one of my 2 days drafting workshop commented – This is the first long workshop wherein I haven’t gone to sleep.

I try not to feel low, come what may. So, I may not be able to recount the lowest point.

 

  1. What are your major strengths and weaknesses?

I’d say confidence and go-get-it attitude are my strengths.

Among weaknesses, there are many. Let’s count a few.

I could never be diplomatic – never hesitated in calling a spade a spade.

I could never be dishonest to the client – have refused briefs where I suspected something shady or illegal.

I could never be apologetic about fees – have demanded what I thought we deserve as good professionals.

I could never be static – have moved on if I didn’t enjoy working in a particular place, even if it meant losing tonnes of money.

 

  1. Do you enjoy debating politics with your friends? Do you think people’s political views change over their lifetime?

Yes, we do discuss politics as well. I think this is the biggest pastime in India, we cannot be oblivious to it. If politicians’ views change so frequently (don’t they change parties?), I think people too are entitled to changing their views, isn’t it? Delivery has become very essential for political parties now more than ever before. If they don’t deliver, they cannot expect the electorate to be their bonded constituency. Change is the only constant these days, it seems.

 

  1. @TUB we are focused to highlight the Boss in yourself. So what do you think is more important out of the two “being a boss” or “being a leader”?

I’d rather be a teammate. A teammate with more experience.

I have been a senior colleague to many lawyers these years and most of them are now partners in biggest Indian and foreign law firms. Most of them are in touch and still cherish our relationship with me and the other way round. This seems to be my biggest accomplishment.

Being a leader encompasses many dimensions – being a well-wisher, guiding light, a source of inspiration, a shoulder to cry on.

Boss, on the other hand, may be a position by virtue of just being in that position and not necessary entail leadership qualities.

You cannot command respect, you have to earn it.

Leadership, therefore, seems more familiar to me rather than being a Boss.

 

  1. Finally, what’s next for “Bhumesh Verma”?

It seems my life has just begun and I have miles to go.

Punishment for good work is more work, isn’t it?

I thought life may become a bit easier for me after leaving big law firms. However, I have never been busier in my life.

Besides work, every day, I get requests for article writing, book writing, blogs, lectures, blogs, students requests for involving them in research work or career counseling and so on. I try to do as much as I can.

Anyways, Zindagi lambi nahi, badi honi chahiye. If we are puppets in God’s hands, we better put up a great show till we are here.

Link : http://www.tub.asia/bhumesh-partner-corpcomlegal/


Tax collections directly…

The income tax department (IT) is always facing pressure from the government to enhance collections so that the financial deficit running in billions of Rupees can be trimmed. Therefore, it keeps coming up with some or the other new tricks up its sleeve. 

Now, the tax sleuths are getting ready to crack whip on the tax defaulters to recuperate tax payments due from them. 

In order to accomplish the targeted tax collections – IT is channelizing its troops to maximize the recovery of tax collections via deducting the monies due directly from the tax defaulters’ bank accounts.

Recovery of recovering outstanding taxes gets multiplied with the fact that the central government is taking a “generous approach” in relation to Goods and Services Tax collections as most of small/medium scale companies are already reeling under the financial burden.

As per the existing laws, IT has the authority to attach the bank account of a tax defaulter and order the banks to deposit the tax dues into IT designated bank account.

With the inception of special provision in tax laws, IT will be competent to directly deduct the tax dues from tax payers’ banks/debtors. IT was forced to invoke this special provision to amass the tax dues as the tax payers’ banks/debtors failed to acknowledge/respond to tax notices issued to them by IT. 

Notices were also sent to debtors of companies directing them to channelize the (dues owed to the companies) to the IT department bank account rather than paying dues to the companies.

Taking cognizance of the notices, it is the duty of banks to deduct the tax amounts from the tax payer bank account and credit such amount directly into IT bank account – however, Banks/debtors inability to respond to tax notices is the primary reason for the existing course of action taken by IT. 

IT is employing a twin strategy for tax collections – Directly deducting tax dues from tax payer bank account via freezing the account/ Procurement of tax dues from the taxpayer’s debtors.

It is first time that the debtors are being issued notices by the IT - as a consequence, the reputation of many companies/persons is at stake. Initiation of the garnishee proceedings will certainly jeopardize the reputation/business of tax defaulters causing considerably financial/business loss. 

Pursuant to the authority conferred on IT by Section 226(3) of the Income Act - Notices of garnishee proceedings are issued to banks and debtors of tax defaulters. 

Taxpayers should realize the implications of the non-payment of tax on the reputation and business of persons/companies. Defaulting taxpayers may find it very tough to get away from the radar of IT as IT is fully equipped with right tools to hunt down the tax evaders and recuperation the tax dues from the tax defaulters. 

It is high time for taxpayers to pay all tax dues within the prescribed time to escape the prospect of tax collection directly from taxpayer bank account/debtors, given the new drive.

Contact Us



New Delhi, Delhi, India

Call us : 9811336533

E-mail : bhumesh.verma@corpcommlegal.com

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