Payment Mechanism Although there were reports about this in the recent past, SEBI yesterday formally notified reforms in relation to the payment process for resident retail investors in IPOs. Under this process, these retail investors do not have to make any payment when they bid for shares in the bookbuilding process, and then wait for refunds in case they do not obtain full allocation on the...
India’s New Competition Law: A Comparative Assessment
Antitrust & Competition Policy Blog points to a new article by Delhi School of Economics Professor Aditya Bhattacharjea on India’s New Competition Law: A Comparative Assessment in the Oxford Journal of Competition Law and Economics. The abstract is set out below: This paper critically examines India’s new Competition Act. I begin by examining the working of its predecessor, the...
Promoters’ Contribution: SAT Ruling in the Reliance Power Case
A few days ago, the Securities Appellate Tribunal (SAT) passed its order in the Reliance Power IPO Case. This is on an appeal from the decision of SEBI (that we had posted about earlier on this blog). I thank one of our readers who sent in a review of the SAT decision, which I reproduce below: Rajkot Saher v. SEBI, Reliance Power Limited Facts: The promoters of Reliance Power Limited...
Warrants to Foreign Investors
The Economic Times reports that there is a proposal within the Government to bring the issue of warrants by Indian companies to foreign investors within the automatic route where foreign direct investment is otherwise permitted under the automatic route. This move, if crystallized through a formal policy pronouncement, will dispel some of the confusion that has been recently caused whereby...
Liquidation Preference: How Effective is it?
In a column in the Economic Times, Amrita Singh and Siddharth Shah discuss the relevance of the concept of liquidation preference in Indian investment transactions: “The progressive liberalisation of the foreign investment regime has provided a major boost to private equity and venture capital investments in Indian companies. With the advent of more sophisticated players in the private equity and...
Share Buyback: The Effect of Shareholders’ Resolution
In a recent case decided last week, the Securities Appellate Tribunal (SAT) had the occasion to decide on the effect of a shareholders’ resolution in the context of a buyback of shares. The SAT decision is available here. The facts of the case are fairly straightforward. The company involved, D-Link India Ltd, proposed to the shareholders a resolution for the buyback of its shares pursuant...
Press Note 1: Changes Expected
Press Note 1 of 2005 issued by the Department of Industrial Policy & Promotion (DIPP) requires foreign companies to obtain the prior permission of the Foreign Investment Promotion Board (and thereby making the automatic route for investment ineligible) if they had a joint venture with another Indian partner in the same field. This condition is applicable for joint venture existing in January...
Recent Restrictions on Short Selling in the US: Comparing the Indian Position
The steep fall in prices of several US investment banks and financial institutions, such as Bear Stearns, Fannie Mae and Freddie Mac have been attributed to false rumours leading to panic selling, which has been further exacerbated by “naked” short selling. This has necessitated emergency action on the part of the Federal Reserve to rescue these institutions. Consequently, the SEC has imposed a...
The Efficacy of Windfall Profits Tax
In an earlier post, we had discussed how the recent spike in oil prices has raised important issues relating to corporate governance in listed public sector companies. Now, this steep oil price rise has rekindled the debate on the need to impose a windfall profits tax on private oil companies. The matter has even acquired political overtones in the US presidential elections, with one of the...
The True Nature of a Stock Swap
A stock swap is a transaction where an acquirer acquires shares of another company and, instead of paying cash for such acquisition, discharges consideration by issuance of its own shares. Business World has surveyed experts on the question as to whether a stock swap amounts to a “sale”. The response is as follows: Yes : 33%No : 10%Maybe : 57% A summary of the reasons for each answer has been set...
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