The recent amendments to the guidelines/circular relating to Consent Orders were discussed here earlier. The latter more detailed guidelines provide for determination of the “Indicative Amount” (leading to final Settlement Amount) and some thoughts on them are shared here. These Guidelines provide very elaborate mathematical formula to cover a variety of violations, facts and the alleged culprits...
Whether Bank Deposits are financial assets – RBI circular creates problems for NBFCs and non-NBFCs
The circular dated 15th March 2012 of the Reserve Bank of India stating that bank deposits will not be treated as financial assets for NBFCs was highlighted in an earlier post by Mr. Satyajit Gupta who has explained its background and rationale. The author has raised a valid concern that the RBI may have about the trading in shell-NBFCs which are dormant and which keep their assets in bank...
Buybacks and open offer – recent decision of SAT
Recently, on 21st November 2011, the Securities Appellate Tribunal (SAT) held that the increase in percentage holding of a person consequent to buyback of shares does not amount to acquisition and thus cannot result in an open offer. This is, in my view, a correct legal interpretation of the law (as also argued by me in an earlier post here). But SEBI had, in practice, taken a view that such...
Buyback of shares and consequent passive increase in % of holding – whether open offer arises? – issue resurfaces
Yesterday, the Securities Appellate Tribunal revived an old controversy which has implications not only on past acts and omissions under the now repealed SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 but also to future acts under the new Regulations of 2011. It is a simple mathematical consequence that a buyback will result in increase in a shareholder’s...
Smaller holding companies exempted from registration
While the August 2010 Guidelines of Core Investment Companies (“CICs”) have been discussed in detail earlier on this blog, the final notification of the Directions by the Reserve Bank of India on 5th January 2011 needs attention for a different reason. And this is to understand how Reserve Bank of India has solved – for itself and for the companies – the problem of thousands of unregistered...
Report/revision of Takeover Regulations
The Report of the Takeover Regulations Advisory Committee (TRAC) is, as is widely reported, released. SEBI’s Press Release summarizes the important recommendations. Here’s my short piece on the subject in today’s Mint. Here are Sandeep Parekh’s views on his blog. Would write soon here particularly on issues such as the hike in threshold limit, increase in size of the...
ULIPs regularised, Insurance companies given absolution
As reported in the press, the President has finally issued an Ordinance dated 18th June 2010, coming into effect immediately from that date, for, what I would call, “regularising” ULIPs. I use that word because not only it is declared that ULIPs (as very widely defined) issued by an insurer are life insurance business but also that they were always so for all practical purposes in this context...
The ULIPs controversy and a Delhi High Court decision
The ULIPs SEBI/IRDA tussle takes new turns practically every week and would not warrant further posts to my last one, (which was also followed by another post by a learned contributor) till either the Court decides the issue or the law is amended. However, I stumbled across a recent decision of the Delhi High Court (Chanchal Jain vs. SEBI (95 SCL 31 (2009)) dated July 24, 2009) on a related...
SEBI suspends its ULIPs order – BUT ONLY PARTLY!
See my immediately preceding post on SEBI’s order prohibiting specified insurance companies essentially from (i) starting new ULIP schemes and raising monies thereon and (ii) accepting further monies from existing ULIP schemes (and of course from doing incidental acts like issuing offer documents, etc.). Readers, I am sure, are too well aware of the heated debate thereafter. It was reported...
SEBI bans ULIPs – but what about other similar “insurance” products?
SEBI has rightly banned ULIPs by its recent Order. It was also the next logical and even bold step to deal with this product that is aggressively and misleadingly sold by several unscrupulous agents under the head-buried-firmly-in-sand attitude of several insurance companies. But what about other products including endowment policies which share the traits of ULIPs? They are less worse only to a...
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