‘Shell companies’ have been in the news recently. On how monies are laundered, laws are avoided/evaded, benami properties are held, etc. through such companies. Curious is that even shares of these companies may be held benami, making it difficult to catch true culprits. There are laws to deal with benami holdings including the most prominent Prohibition of Benami Property Transactions Act, 1988...
Supreme Court’s decision on the Competition Act raises concerns
[Guest post by Varun Thakur, BA.LL.B fourth year student at National Law University, Jodhpur.] The Supreme Court of India (‘SC’ or ‘the Apex Court’) has for the first time ruled on the substantive provisions under the Competition Act, 2002 (‘Competition Act’ or ‘the Act’) in the case of Competition Commission of India (‘CCI’) v. Coordination Committee of Artists and Technicians of WB Film and...
SEBI accuses statutory auditors for fraud, etc.
SEBI has passed an interim order against various persons which also doubles up as a show cause notice (“SCN”) on the erstwhile statutory auditors (“the Auditors”) of a listed company. The Auditors are asked to show cause why directions should not be issued to debar them from issuing certificates under several specified securities laws. While directions have been issued against the concerned...
Disgorgement of profits – profits made in violation of SEBI directions vs. profits made in violation of law
In perhaps a first, SEBI has ordered impounding of profits that were made through legitimate and non-manipulative trades though in violation of SEBI directions not to trade. An earlier order against certain persons had “prohibited them from buying, selling or dealing in the securities market, directly or indirectly, till further orders.”. While such directions were in force, such parties...
SEBI passes first order on newly acquired jurisdiction commodity markets – but also raises concerns why there are dual bans
SEBI has passed perhaps the first adverse order on commodity trading after having acquired jurisdiction over this field from FMC. This order coincidentally comes almost exactly one year after this jurisdiction was proposed for it in Finance Bill 2015. The order is also curious as it specifically passes wider/dual bans debarring parties not only from commodity markets but in transactions of...
Political contributions by foreign owned companies to be permitted – and with retrospective effect
It was earlier posted here that a proposed amendment through the Finance Bill 2016 will permit certain CSR contributions by companies with majority foreign holdings. There is a further implication to this that also needs consideration. This amendment will also permit political contributions by such companies. The amendment is proposed to have retrospective effect from 26th September 2010. This...
MDs/WTDs crossing 70 years of age mid-tenure lose their jobs
The Bombay High Court has held that Managing/Whole-time Directors (“EDs”) will lose their jobs if they cross 70 years of age during their tenure of appointment. This is the new position of law under Section 196(3)(a) of the Companies Act, 2013, which came into effect from 1st April 2014, and which was not so under the corresponding Section 267 of the Companies Act, 1956. (Note:- It was...
SEBI debars Auditor
SEBI has, for the first time to my recollection, debarred an Auditor (Chartered Accountant) from issuing certificates for a wide range of entities and purposes. The matter concerned a listed company (“the Company”) that was alleged to have carried out several accounting irregularities such as inflated revenues/profits, misclassification of assets, etc. The report of the Auditors did not point...
SEBI takes into account social media connection of parties in insider trading case
This order of SEBI is otherwise just another case where parties were found to have allegedly profited from insider trading. The only noteworthy point is that the connection between two of the parties was detected because they had common friends on social media. To my recollection, this is perhaps the first case where SEBI investigated the social media profile of the parties. The Hon’ble...
Huge penalties being levied by SEBI following recent Supreme Court decision
SEBI has recently passed several orders levying penalty of crores of rupees for matters like non-filing of documents/information. What is interesting is that levy of such huge and flat penalties is said to be mandatory and inevitable following the mandate of recent decision of the Supreme Court in case of SEBI v. Roofit Industries Ltd (dated 26th November 2015). Such levy is...
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