It is generally understood that corporate governance norms ought to address agency problems between various actors in a company. Moreover, in companies with concentrated shareholding, the agency problems between controlling shareholders (referred to in India as “promoters”) and minority shareholders tend to be rampant, and hence corporate governance measures need to be targeted to address that...
Foreign Investments in Category III Alternative Investment Funds
[The following guest post is contributed by Kemi Gupta, who is a 5th year B.A., LL.B (Hons.) student at NALSAR University of Law] In a matter of only a few years,[1] India’s alternative investment industry has grown to Rs. 20,700 crore in size,[2] and is yet claimed to be in its early stages. Alternative investment funds (“AIFs”) constitute any privately pooled investment...
Disgorgement Orders under Indian Securities Law
[The following guest post is contributed by Shubham Janghu, a third year student at Jindal Global Law School with inputs and minor edits by Aditya Swarup, who is an Assistant Professor at Jindal Global Law School.] Introduction Gain-based remedies, though rarely adjudicated in India, are an important aspect of commercial law. The powers of courts to award such remedies arise from statute, for...
Management Conflicts and Board Independence
In the ongoing saga involving the boardroom battle for the Tata Group, a new development may have significant implications for corporate governance practice in India. Yesterday, a Tata Group company, The Indian Hotels Company Limited (IHCL) notified the stock exchanges of a meeting held among the independent directors of the company. It stated: Taking into account Board assessments and...
SEBI’s Proposals on Stock Advice through Social Media
Nearly a month ago, the Securities and Exchange Board of India (SEBI) issued a Consultation Paper on Amendments/Clarifications to the SEBI (Investment Advisers) Regulations, 2013. Although the consultation paper deals with a number of issues relating to investment advice, one aspect has received undue attention, and perhaps rightly so. Tucked into the consultation paper are a couple of paragraphs...
SEBI’s Enhanced Standards for Credit Rating Agencies
On November 1, 2016, the Securities and Exchange Board of India issued a circular containing Enhanced Standards for Credit Rating Agencies. These seek to introduce greater stringency in the operation of the rating industry. The areas covered include: – Formulation of Rating Criteria and rating processes and public disclosure of the same. – Accountability of Rating Analysts. –...
SEBI to Reconsider the Largest Penalty Imposed
On September 22, 2015, an Adjudicating Officer (AO) of SEBI passed an order against PACL Limited and certain other persons imposing a penalty of Rs. 7,269.5 crores in connection with a case involving the illegal and fraudulent mobilization of funds from the public. This is said to be highest penalty that SEBI has ever imposed. Such a penalty was imposed under section 15HA of the Securities and...
SAT on Market Manipulation Involving GDRs
Last year, we had discussed a decision of the Supreme Court which clarified that the Securities and Exchange Board of India (SEBI) had jurisdiction over the issuance of global depository receipts (GDRs), due to which lead managers to such issuances would also come within the purview of SEBI if their actions were found to violate Indian securities law. This involved PAN Asia Advisors Limited and...
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