Recently, Bombay High Court rejected a PIL seeking action by SEBI in respect of gold purchase schemes (Sandeep Agrawal vs. SEBI [2013] 39 taxmann.com 139 (Bom.)). In a brief decision of less than half a page, the Court essentially held that contracts are private commercial contracts and do not require interference by SEBI. The Court observed, “If any shop owner is running such a scheme and the...
SEBI issues draft settlement Regulations for comments
SEBI Act and related laws were amended recently to provide specific legal backing for settlement by consent orders. The background of this and some issues were discussed here (which post has reference to earlier posts and other links too). One point made was that the new law requires that such settlement should be on basis of Regulations that are prescribed. SEBI has now issued a consultation...
Ambiguity regarding Consent Settlements – whether resolved?
Readers may recollect that the legal basis of settlement by Consent Orders by SEBI has been questioned before the Delhi High Court. Recently, an Ordinance (“First Ordinance”) had been notified which amended the SEBI Act apparently with the intention to provide specific provisions in the form of Section 15JB for settlement by Consent Orders, both past and future (similar amendments...
SAT now holds front running to be an offence
The Securities Appellate Tribunal (“SAT”) has now held that front running is indeed a fraudulent and manipulative act in violation of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (“PFUTP Regulations”). It has departed from its earlier decisions in case of Dipak Patel (discussed here) and Sujit...
Anomalous amendments in Ordinance – how will they affect Consent Orders, past and future?
Recent Ordinance amending securities laws has been discussed here and here in this blog. However, one concern arises in respect of the amendment relating to Consent Orders. It may be recollected (as, for example, reported here) that the legal basis of the Guidelines relating to Consent Orders was questioned before the Delhi High Court by a PIL. Had this petition been successful, it was possible...
RBI makes 1000s of companies anxious by “Are you an unregistered NBFC?” notices
Over last week, Reserve Bank of India has sent notices to thousands – tens of thousands perhaps – of companies asking them whether they are NBFCs. And, if yes, why they have not registered. This is worrying because if a Company is an NBFC and has not registered, it entails serious consequences for the Company and its concerned directors/officers. For example, the law provides for minimum and...
One Person Company – a still-born, half-baked concept?
The Companies Bill 2012 proposes a new concept of One-person Company (OPC). The obvious objective is to overcome the hurdle of needing a second person to form a company, despite the saying that “two’s company”. This brief post is to highlight its nature, some issues and also questioning the real benefit of an OPC. OPC, as the term implies, is a company with one and only one shareholder. The need...
Mandatory imprisonment under Companies Bill 2012
The Companies Bill 2012 has an innocuously titled chapter titled “Miscellaneous” which provides stringent and perhaps unprecedented punishment. The Chapter provides for imprisonment and fine for several types of situations. A minimum imprisonment (six months/three years) is also provided. Clause 447, for example, says that any person found guilty of fraud shall be punishable with imprisonment of...
Yet another CIS scam? Further loss of 100s of crores of rupees by investors?
Yet another CIS scheme is unearthed, by income-tax authorities who intimates the details to SEBI. SEBI investigates and passes an Order asking the Company to repay investors or face prosecution. However, it is almost certain that investors will lose significant part of their monies, considering the huge amounts collected and the low assets the company has. The liabilities in this case are at...
Amendments to Takeover Regulations
SEBI has recently made certain amendments to the Takeover Regulations 2011 which are as follows:- Public announcement in case of preferential allotment In case an open offer is triggered by a preferential announcement, it is now provided that the public announcement shall be made on the date when the Board of Directors authorizes such resolution. The erstwhile requirement was that public...
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