Bits of Interest

1.         Regulation of Credit Rating Agencies
Drawing lessons from the role of credit rating agencies (CRAs) in the recent financial crisis, SEBI has imposed additional transparency and disclosure norms for the Indian CRAs. SEBI’s circular issued on May 3, 2010 covers issues such as maintenance of records of the rating process, dealing with conflicts of interest of CRAs, obligations in respect of rating structured products and unsolicited credit ratings.
2.         Stock Exchanges and Right to Information Act (RTI)
The pendulum swings as a Division Bench of the High Court in an appeal filed by the National Stock Exchange (NSE) stayed the “operation of a single bench order which had on 15 April held that stock exchanges are “quasi” governmental bodies which are bound to disclose information to the public under the transparency law.” NSE is therefore outside the purview of the RTI, at least for now.
3.         Outbound M&A: Comparing India and China
This report in the Mint suggests increasing convergence of strategies between Indian and Chinese firms in embarking on acquisitions abroad. Thus far, while Indian acquirers tended to be private promoter-driven looking for acquisitions of operating firms with valued brands, Chinese acquirers were primarily state owned enterprises targeting resources companies. There were differences in cultural outlook as well between the two types of acquirers. However, with the convergence as predicted there could only be more competition between Chinese and Indian acquirers for offshore targets.
4.         IRDA Guidelines on ULIP
While the larger issue of regulatory domain over ULIPs is pending before the courts, the IRDA has issued additional guidelines that, among other things, provide for a minimum sum assured payable on death.
5.         Trends in Legal Education
The recently concluded “National Consultation for Second Generation Reforms in Legal Education” represents an important step in the area. Here is an extract from Prime Minister Manmohan Singh’s speech:
There are revolutionary changes taking place in information systems, communications and technology which require corresponding changes in our legal system. Highly specialized areas of law such as intellectual property law, corporate law, cyber law, cyber crimes, human rights law and international commercial law require specialized training and skills that should be imparted by our law schools. The opening of trade and capital markets as a result of the processes of globalization and the retreat of the State from some of its traditional roles have raised new legal issues concerning the way in which the poor and marginalized sections can protect themselves from the adverse effects of these changes. The very nature of law, of legal institutions and the practice of law are in the throes of a paradigm shift.
Thanks to Sumit Agrawal for pointing to the above extract.
Law Minister Veerappa Moily presented the Vision Statement.
6.         Evaluating India’s Financial Regulators
Ajay Shah has a column in the Financial Express evaluating the performance of three of India’s financial sector regulators, viz. the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority (IRDA), which also sets out factors that make or break a regulatory efforts in the Indian context.
7.         Lack of Conversion of NBFCs into Banks

Anil Menon proffers reasons in the Financial Express as to why we have not witnessed more non-banking finance companies (NBFCs) converting into full-fledged banks in recent times. Reasons include those that are of business as well as regulatory nature.

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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