ArchiveNovember 2011

Buybacks and open offer – recent decision of SAT

Recently, on 21st November 2011, the Securities Appellate Tribunal (SAT) held that the increase in percentage holding of a person consequent to buyback of shares does not amount to acquisition and thus cannot result in an open offer. This is, in my view, a correct legal interpretation of the law (as also argued by me in an earlier post here). But SEBI had, in practice, taken a view that such...

Rescission and Repudiatory Breach

When C and R enter into a contract which is breached by R, C can either claim specific performance of the contract, or elect for the breach to have discharged the contract and claim damages. However, in cases where the latter option is chosen, it has been recognized since Johnson v Agnew that the contract continues to remain valid until the date of the repudiatory breach and is discharged only...

Crowd-Funding and Its Regulation

The concept of crowd-funding seems to have caught on. In one form, it involves small and medium-sized companies raising funding from investors using the Internet (usually social networking sites or specialist crowd-funding websites). While the concept itself is quite wide and allows for fund raising in many different contexts, it is particularly useful for small entrepreneurs and start-ups. But...

Announcement: NLSIR Public Law Symposium

The following notification from the National Law School of India Review may be of interest to our readers: “The National Law School of India Review, the flagship journal of National Law School of India University, Bangalore is pleased to present the first NLSIR Public Law Symposium to be held on 10 December, 2011 at the National Law School campus. The theme of the...

SEBI Decisions on Public Offerings, Responsibility Reporting

SEBI’s board has taken decisions on certain matters involving public offerings and business responsibility reporting. As far as the public offering process is concerned, some reforms have been introduced to promote the capital markets (e.g. increasing the minimum allotment for anchor investors and creating a separate category of disclosures for venture capital funds and other funds that own...

Commentary on the SEBI Act

Taxmann has just published a legal commentary on the SEBI Act titled “Agrawal & Baby on SEBI Act”. The book has been authored by two serving officers of SEBI, and has been edited by Amit Agrawal (who also occasionally contributes to this Blog as a guest). Bar & Bench has this report.

SAT on “Unpublished Price Sensitive Information”

The Securities Appellate Tribunal last week passed an order on an insider trading case, in which it lays down some guidelines as to the scope of “price sensitive information” under the SEBI (Prohibition of Insider Trading) Regulations, 1992. The specific question pertains to whether “the decision taken by a listed investment company to dispose of a part of its investment is “price sensitive...

Supreme Court’s Silence on “Control” Under the Takeover Regulations

Early last year, the Securities Appellate Tribunal (SAT) had passed an order in the Subhkam case holding that protective provisions in shareholders’ agreements (such as affirmative rights) adopted by investors do not amount to “control” for purposes of the SEBI Takeover Regulations. Although SEBI had initiated an appeal before the Supreme Court, the matter has now been disposed off by the Supreme...

FDI in the Civil Aviation Sector

With the civil aviation industry in India facing concerns on the financing front, calls are being made to liberalise the foreign investment rules in the sector. Of course, that stance has been subjected to criticism on the ground that the foreign direct investment (FDI) policy should not be utilized to bail out certain players in the industry. In any event, there are a couple of issues to be...

Buyback of shares and consequent passive increase in % of holding – whether open offer arises? – issue resurfaces

Yesterday, the Securities Appellate Tribunal revived an old controversy which has implications not only on past acts and omissions under the now repealed SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 but also to future acts under the new Regulations of 2011.  It is a simple mathematical consequence that a buyback will result in increase in a shareholder’s...

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