ArchiveNovember 2014

SEBI Reforms – Part 3: From Listing Agreement to Listing Regulations

In most jurisdictions, several aspects of corporate governance and disclosures for listed companies are regulated through stock exchange listing requirements. These apply only to listed companies, and they are enforced by the stock exchanges. Operating as conditions to continuous listing, one of the enforcement mechanisms used is the threat (sometimes carried out) of delisting the securities...

Tighter Restrictions on Offshore Derivative Instruments

The issue of offshore derivative instruments (ODIs) such as participatory notes (PNs) have been the subject matter of regulatory controversy for some time now. These are instruments issued by foreign institutional investors (FIIs) (now foreign portfolio investors (FPIs)) to investors overseas that mimic the risks and rewards on underlying securities held by the FIIs/FPIs in Indian companies...

SEBI Reforms – Part 2: Delisting

Delisting of securities tends to be somewhat controversial given that it represents the tension between the interests of the controlling shareholder who want to delist the company and the interests of minority shareholders who are caught between the options of exiting the company at the offered value or remaining in the company without the liquidity and protections that a stock exchange listing...

SEBI Reforms – Part 1: Insider Trading

Yesterday, SEBI’s board unleashed a series of capital market reforms. These relate to insider trading, delisting, enforceability of the listing agreement and several other matters. In this post, I briefly examine the implications of the reforms on regulations pertaining to insider trading. The SEBI board has approved a new set of regulations dealing with insider trading. While the text of the...

The Bombay High Court on Mutual Mistake, Damages and Restitution

In Rolta v MIDC, the Bombay High Court has recently considered some important questions relating to the doctrine of mutual mistake, damages for breach of contract and restitution. It is worth examining the judgment closely as it appears to depart from some well-established principles of contract law. The case arose out of a Memorandum of Understanding (‘MoU’) which Rolta and MIDC entered into in...

Delaware Court Ruling on Deal Conditions in the Apollo-Cooper Merger

A recent Delaware court ruling deals with matters involving the “unraveling of the Agreement and Plan of Merger (the “Merger Agreement”) by which a large Indian tire manunfacturer—[Apollo]—was to buy a large American tire company—Cooper Tire & Rubber Company (“Cooper”).” Billed as among the largest overseas acquisitions by an Indian company, Apollo was to acquire all the shares of Cooper...

Indian Companies Issuing Securities Overseas

Historically, Indian companies have issued equity instruments in the form of depository receipts (either American depository receipts (ADRs) or global depository receipts (GDRs)) or convertible debt instruments in the form of foreign currency convertible bonds (FCCBs). Of late, such overseas securities issuances have reduced quite significantly. Now, the Government has revamped the legal regime...

SEBI Informal Guidance: Scope of Prohibition

[The following post is contributed by Supreme Waskar, partner at Sterling Associates, Mumbai] Almondz Global Securities Limited (“AGSL”) is a stock broker and merchant banker registered with SEBI. On March 21, 2014 SEBI had prohibited AGSL from taking up any new assignment or involvement in any new issue of capital including an IPO, follow on issue etc, from the securities market in any manner...

Are SEBI’s FAQs binding on parties/SEBI?

How far are FAQs on SEBI Regulations, etc. binding or can even be relied on by SEBI? More so, when substantive legal issues are to be decided on which may result in grant/rejection of relief to parties or even levy of penalty for violation of Regulations. SEBI has recently passed an order on in which it relied on its own FAQs and made some curious observations. The core issues in that case are...

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