There is no prohibition on synchronised trading in securities, so long as the securities are delivered and that the transaction has not been effected with manipulative intent to artificially move the price of the stock. This position has been reiterated in a recent order of the Securities Appellate Tribunal (SAT) involving Subhkam Securities Private Limited. The relevant portions of the order are...
Miscellaneous
1. Online Shareholder Participation In a previous post, we discussed the recent introduction of mandatory e-voting for large listed companies with effect from October 1, 2012. The Harvard Law School Corporate Governance Forum has a post that sets out some principles and best practices that companies are encouraged to adopt while conducting...
Guarantees and Performance Bonds
Payment obligations under commercial contracts are often secured by means of guarantees issued by banks, which guarantee the performance of the payment obligation by the buyer. For instance, if A and B enter into a contract whereby A agrees to sell B a ship for the price of $50 million, B’s bank may issue to a payment guarantee to A to secure the payment of this amount from B. In the...
Enforceability of side letters – a postscript
In an earlier post, we had discussed the decision of the English High Court in Barbudev v Eurocom on the issue of the enforceability of side letters. In April this year, the Court of Appeal upheld the ultimate decision of the High Court, departing however, from the reasoning adopted. As discussed in the earlier post, the key issue in the case was whether a side letter signed by the parties could...
Ostensible Authority and Estoppel
The Privy Council in Kelly v. Fraser, [2012] UKPC 25, recently revisited the issue of whether an agent can be said to have ostensible authority on the basis of his own representations. Mr. Fraser, the Respondent, became the CEO of Island Life Insurance Company on 1st February, 2000, and shortly after that became a member of the Salaried Staff Pension Plan (“SSP”) of the company. The SSP was...
Announcement: NLSIR Call for Submissions
(I have received the following announcement from the NLSIR, which may be of interest to our readers) The National Law School of India Review is now accepting submissions for its upcoming issue – Volume 25(1). The National Law School of India Review (NLSIR) is the flagship law journal of the National Law School of India University, Bangalore, India. The NLSIR is a bi-annual...
E-voting in Top Listed Companies
As we have previously discussed, the participation of retail (or even institutional) shareholders in Indian companies’ decision-making is still far from desirable. The Government has, however, been taking steps to enhance participation. About a decade ago, the concept of postal ballot was introduced. However, that has not made significant inroads, due to which the next round of reforms have been...
The Constitution Bench elides repugnance and occupied field
That the title of this post is a part of Indian constitutional law is explained by the fact that the validity of tax and commercial legislation is often challenged on the ground that it conflicts with a similar legislation enacted by another legislature. Often the challenge is on the basis of legislative competence, and this requires a careful analysis of not only the words of Schedule VII, but...
SEBI’s complex formula for settlement by consent – some concerns
The recent amendments to the guidelines/circular relating to Consent Orders were discussed here earlier. The latter more detailed guidelines provide for determination of the “Indicative Amount” (leading to final Settlement Amount) and some thoughts on them are shared here. These Guidelines provide very elaborate mathematical formula to cover a variety of violations, facts and the alleged culprits...
Interpreting the Takeover Regulations
With the current Takeover Regulations (that came into effect in October 2011) being fairly recent, they are being subjected to interpretation during the course of their functioning. SEBI this week issued two sets of informal guidance in the context of one takeover. The first pertains to whether an acquirer holding less than 25% can make a voluntary offer and then acquire shares in the market...
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