SEBI has recently levied the highest penalty in its history of Rs. 7269 crores on PACL. It has made findings of serious violations of law and hence the maximum of penalty may be justified. However, there are some issues that are of concern. The facts of the case may be quickly summarised here. PACL, as per SEBI’s order, is one of the several so-called Collective Investment Schemes that have...
Journal on Corporate Law & Governance: Revised Call for Submissions (revised deadline with some changes)
Vide an earlier post, the details of the call for papers for Journal on Corporate Law & Governance were published. The Editorial Board of the Journal has informed that they have made some changes and also extended the deadline for submission of papers and requested that the following revised guidelines be posted:- JOURNAL ON CORPORATE LAW & GOVERNANCE CALL FOR PAPERS FOR VOLUME II ISSUE 1...
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...
Is levy of penalty mandatory and inevitable? – mindless/rote application of Supreme Court decision in Shriram?
(Note:- This article is my latest contribution to my monthly column on Securities Laws in Bombay Chartered Accountants’ Journal) Penalty is mandatory because Supreme Court says so, SEBI consistently and incorrectly holds Almost each and every SEBI order levying penalty relies on a Supreme Court decision in Shriram’s case (SEBI vs. Shri Ram Mutual Fund (2006) 68 SCL 216). The reliance is...
“Deposits” existing on 31st March 2014 – how to be treated under new Companies Act/Rules?
Since notification of the Companies Act, 2013 and Rules thereunder, certain transitional issues relating to “deposits” are causing concerns to numerous companies, big and small, listed and unlisted, public or private. They arise from the substantially modified definition of the term “deposits”. Many items of loans and other receipts that were not “deposits” earlier being now treated as deposits...
Whether Consent Orders – or rejection of consent applications – are appealable?
Whether SEBI at all had power to settle disputes by Consent Orders has been questioned earlier before Delhi Court and it appears that the matter is still pending. Seemingly to pre-empt this issue, an Ordinance had been passed amending the SEBI Act and related statutes, which Ordinance has been re-issued several times. This issue has been discussed several times earlier in this blog, with this...
Electoral contributions by companies having more than 50% foreign holding – Delhi High Court decision
The Delhi High Court decision in case of Association for Democratic Reforms vs. UOI ([2014] 43 Taxmann.com 443 (Del.)) is a reminder of certain very widely framed provisions of law originally of FERA times that continue to have impact. It is very timely too in this election season when many companies have or may still be giving electoral contributions. Even more so considering that the new...
Vexed issue of allowability/quantification/timing of expenditure on ESOPs
A troublesome issue for companies is the deductibility of ESOPs expenditure under the Income-tax Act, 1961. ESOPs (employees stock options/shares) are often given at a discount at their fair value. A share having a fair value of Rs. 100 is given, say, at Rs. 80. This is one extreme of a simple example. In practice, ESOPs are even more complicated with different features such as of vesting...
Section 185 & how ill-drafted, ill-implemented provisions cause serious consequences
The manner in which the Companies Act, 2013, is being implemented is causing ongoing grief to numerous companies. As the financial year comes to a close, several violations with potentially serious consequences are being noticed by auditors and others. The deservedly much maligned Section 185 is one example that is focus of this post (several earlier posts have also discussed many issues)...
Contrary to newspaper reports, no removal of limits to corporate political funding
Certain recent newspaper reports (e.g., Times of India and Indian Express) have created a misleading impression that limits on corporate electoral funding has been removed. It is said that introduction of the concept of electoral trust read with a recent notification of MCA has made this happen. And that now corporate can fund political parties without any limit. One report states “Ahead of...
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