In a far-reaching decision, the Securities and Exchange Board of India has ruled in an adjudication order that members of the board of directors of a listed company (“Target Company”) would be persons having control of the Target Company. Consequently, directors of the Target Company ought to make disclosures of their holdings under the disclosure requirements set out in the SEBI (Substantial...
Precision Remains Elusive with Investment Law
I wrote the following column in the Business Standard on February 23, 2009: In a bold move, the government has opened up foreign investment in an unprecedented manner. The move legitimizes many a structure that would have hitherto been keeping even their authors shy. The Cabinet Committee on Economic Affairs has taken a policy decision that any Indian company in which foreign ownership is not...
Amendments to Takeover Regulations differently wide and narrow
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Regulations”) were amended last week to empower SEBI to grant exemptions from the strict operation of various operative provisions of the Takeover Regulations – initial comments on this blog were posted here. I wrote the following comment in the Economic Times, edition dated February 16, 2009:- The Securities...
All-pervasive lack of governance in the system
I wrote the following in my column in Business Standard today:- It is always tempting to write a ‘year that was’ piece towards the end of December. This column will not do so. Instead, it seeks to look at three unrelated current events that would remind one of how another year may go by, but the poor quality of governance remains unresolved in India. At the political level, the Mint published a...
A different perspective on the six-month ban on contra transaction under Insider Trading Regulations
On December 5, 2008, a comment on the recent amendments to the SEBI (Prohibition of Insider Trading) Regulations, 1992 (“Insider Trading Regulations“) was made here. I have a different perspective on the issue. Every listed company is required under Regulation 12 of the Insider Trading Regulations to formulate a code of internal procedures. Such a code is required to be modeled on the...
Self Regulation for Directors on SEBI’s Board
I recently blogged about the transparency measures that SEBI has initiated by deciding to make its agenda papers and minutes of proceedings public. Under the first such disclosure, it is now learnt that on December 4, 2008, the Board of Directors of SEBI adopted a Code on Conflict of Interests for its members. You can get it on the hyperlink above. In a nutshell, the Code requires every director...
Transparency Measures in SEBI
The Securities and Exchange Board of India (“SEBI”) is taking significant and material steps towards bringing in transparency in its own workings. First, the status of offer documents being processed by SEBI is now online. After repeated complaints about delays in clearing offer documents, SEBI now publishes every week, the status of the offer document under process. Therefore, the...
Anand Bhatt, negotiated to his end
It would have been his 60th birthday tomorrow. And he was overseeing preparations for the anniversary celebrations of his firm, which completed 125 years on November 29, 2008. Instead, his remains were cremated at Mumbai’s Chandanwadi electric crematorium that evening. Anand Bhatt, was a leading solicitor and senior partner of Wadia Ghandy & Co. I had first heard about him from my classmates...
Draw the line clearly for public shareholding
Last week the Economic Times reported here that listed companies would soon have to increase their public shareholding levels – possibly by 3 – 5% annually until they become compliant with continuous listing requirements. Whether the minimum public float should be 25% or 20% is a matter of policy wisdom. The law always has to draw a line somewhere and treat people on either side of the line...
Death Warrant for Share Warrants
The recent set of amendments effected by the Securities and Exchange Board of India to the SEBI (Disclosure and Investor Protection) Guidelines, 2000 (“DIP Guidelines”) in terms of a circular dated August 28, 2008 (“SEBI Circular”) contains an unexpected surprise. The SEBI Circular 2(vi) states:- “Presently, as per the guidelines on preferential allotment, warrants issued on preferential basis...
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