Another SEBI Order on Participatory Notes

About a month ago, we discussed SEBI’s order in the case of Barclays Bank in relation to the issue of participatory notes/ offshore derivative instruments (ODIs). Barclays had been prohibited from issuing, subscribing or otherwise transacting in any ODIs until reporting systems are put in place to the satisfaction of SEBI.

Close on its heels comes another SEBI order, this time involving Societe Generale. SEBI’s case is that Societe Generale failed to provide appropriate information regarding onward issuance of PNs as required under the appropriate SEBI regulations. The transactions are somewhat similar to those in the Barclays case, where the issuance of ODIs was to Hythe Securities Limited in relation to the underlying shares of Reliance Communications Limited. Accordingly, Societe Generale has been ordered not to issue/subscribe or otherwise transact in any fresh/new offshore derivative instrument till such time that it provides correct reporting of these instruments to SEBI.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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