ArchiveSeptember 2011

Revised Draft Guidelines on Securitisation

The Reserve Bank of India has issued a revised draft of its guidelines on securitisation transactions. This takes into account reform efforts internationally to deal with distorted incentives of originators in downselling financial assets soon after their creation. The preamble to the revised draft sets forth the rationale: 1.1 Securitisation involves the pooling of assets and the subsequent sale...

Further Liberalisation of ECB Policy

In the last few days, the Reserve Bank of India (RBI) has issued a string of circulars to liberalise the policy on external commercial borrowings (ECB). The include the following: – utilisation of 25 per cent of the fresh ECB raised by a company in the infrastructure sector towards refinancing of the Rupee loan/s availed by it from the domestic banking system, under the approval route;...

Berle Symposium – Corporations, Law & Society

The Seattle University Law Review recently published in a special issue works that were presented at this year’s annual symposium of the Adolf A. Berle, Jr. Center on Corporations, Law & Society at Seattle University. The articles are now available online at , and include an article “Directors as Trustees of the Nation?  India’s Corporate Governance and Corporate Social Responsibility...

Issue of GDRs and Market Manipulation

Last week, SEBI issued an order relating to a specific transaction structure that involved the use of global depository receipts (GDRs) to allegedly manipulate the stock price of several companies. The modus operandi was as follows. The companies issued GDRs, which were acquired by various foreign institutional investors (FIIs) or their sub-accounts. The GDRs were all soon thereafter converted...

New Takeover Regulations Notified

In July this year, SEBI accepted most of the recommendations of the Takeover Regulations Advisory Committee (TRAC). The key changes have been listed here. Yesterday, SEBI formally notified the new version in the form of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 that will come into effect on the 30th day from its publication in the Official Gazette. SEBI has also...

In Memoriam: C. Achuthan

Mr. C. Achuthan, the former presiding officer of the Securities Appellate Tribunal and chairperson of Takeover Regulations Advisory Committee passed away this week. Somasekhar Sundaresan and Sandeep Parekh pay tribute to the individual who played an instrumental role in the evolution of securities regulation in India over the last decade.

Relaxation on Foreign Fund Flows

Last week, the Government and the Reserve Bank of India (RBI) have announced decisions that relax erstwhile policy on external commercial borrowings (ECB) as well as foreign investment in limited ways. First, the Government has decided to relax the ECB policy to recognise the Chinese yuan as one of the permitted currencies. The overall limit under the automatic route has been increased from US$...

No Takers for Takeover Offers

Historically, the response of public shareholders to takeover offers in Indian companies has been lukewarm. This is primarily due to the fact that the market price of the company’s shares following the takeover announcement tends to be higher than the offer price. However, a report in the Business Line contains a study of recent offers indicating that shareholders who did not exit in the offers...

Court of Appeal on the Award of Damages

A recent decision of the UK Court of Appeal revisits the issue of alternative remedies, one on which there has been significant academic debate. An earlier post discussed the issue of concurrent liability in contract and tort, where the Court of Appeal had clarified some doubts in the area. However, the issue in Ramzan v Brookwide was different- not so much the existence and scope of different...

RBI Report on NBFC Norms

Last week, a committee formed by the Reserve Bank of India (RBI) issued its report recommending changes to the manner in which non-banking finance companies (NBFCs) are regulated in India. A number of changes have been suggested to the operational norms governing NBFCs. These include capital adequacy requirements, liquidity ratio, asset classification and provisioning and the like, which are...

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