ArchiveJanuary 2008

The Case for an Indian SWF

BackgroundSovereign wealth fund (SWF) is a fund owned by a state composed of financial assets such as stocks, bonds, property or other financial instruments. Sovereign wealth funds are, broadly defined, entities that can manage the national savings for the purposes of investment. The accumulated funds may have their origin in, or may represent foreign currency deposits, gold, SDRs and IMF reserve...

Review of FDI Policy

The Union Cabinet has approved changes to the Foreign Direct Investment (FDI) Policy, and increased avenues and limits for foreign investment in certain sectors. These are: – construction development projects– civil aviation– petroleum & natural gas– commodity exchanges– credit information companies– mining– industrial parks. For details, see reports...

Some Lessons for M&A Deal Documentation

Recent months have witnessed a spate of M&A deals in the US that have turned sour even before they were consummated, and they have quite naturally ended up in court. In pure legal terms, these involve a scenario where disputes arise between the parties between signing of the definitive agreements and closing whereby one of the parties is not willing to perform its obligations under the...

Company Information in India

The Harvard Business School (HBS) Working Knowledge carries an interview of Professor Tarun Khanna of HBS in connection with the release of new book “Billions of Entrepreneurs in India and China”. An excerpt from the book (which compares India and China on a broad range of factors) deals with the availability of company information in India with some references to the nature of the legal system:...

SEBI: Proposal on Integrated Disclosures

An aspect of the Indian securities regulations that has always been somewhat puzzling is the stark disparity in the disclosure regimes governing the primary markets and secondary markets. While a strong disclosure regime has been a boon to the primary markets where companies making a public offering are required to issue a prospectus with fairly onerous disclosure requirements accompanied by...

Lessons from the Turmoil

Today’s Business Standard carries an editorial that deals with possible regulatory responses to financial markets crises, a theme also addressed in a recent post on this blog. Here is an excerpt from the editorial: “The history of financial regulation shows such regulation is rooted in crisis. Significant regulatory change usually takes place in response to the perceived inability of the previous...

Miscellaneous: Stock Exchanges; Online IPO Applications

There are two pieces in the Economic Times today that deal with stock exchange operations and electronic settlement in IPOs. 1. Alternative Trading Systems The first is an op-ed by C K G Nair and M S Sahoo that explains the metamorphosis that the stock exchanges are undergoing. They write: “For the past few years SEs have been in the process of shedding their old skins to look young and to...

More on the “Decoupling” Theory

The previous two posts (here and here) have argued that the “decoupling” theory, when it comes to emerging markets (like India and China), is a myth. Here is some additional analysis in an article in the Economist: “INVESTORS were until recently big fans of the “decoupling” theory, the notion that Asian economies can shrug off an American recession. This week’s plunge in share prices, at...

Stock Market Turmoil and the Role of Regulation

This is a cross-post from the Law and Other Things blog, to which also I contribute. Riding the downward tide of the global capital markets, Indian stock prices too tumbled 1,408 points on Monday, January 21, 2008 making investors poorer by $155 billion in a single day. The rout continued on Tuesday as well, before the markets partially recovered towards the end of the week. Reports indicate that...

The Asian Stock Market Meltdown

The oft-repeated adage that goes “when America sneezes, the rest of the world catches a cold” was proven to be true once again when stock markets across Asia crashed, some to record levels. The Indian markets were not to be spared—the Sensex tumbled 1,408 points on Monday, and share prices continued to dive today on opening of the markets when trading had to be halted. It is indeed intriguing...

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