One constantly hears calls for greater activism among shareholders (particularly institutional investors) as one of the measures towards enhancing corporate governance in India. A method that has been utilized in other jurisdictions such as the U.S. is through proxy-advisory firms who advise investors on how to vote on resolutions proposed by companies. The concept of proxy-advisors seems to have...
More on Mandatory CSR
While the introduction of the new Companies Bill in Parliament is eagerly awaited, one issue continues to hold a great amount of attention. Although the concept of corporate social responsibility is generally well-accepted and welcome, more voices are being heard against imposition of a mandatory requirement. Recent pieces by Pratap Bhanu Mehta and Ajay Shah and a Business Standard editorial...
Insider Trading: Role of the Compliance Officer
A few years ago, SEBI’s Insider Trading Regulations were amended to specifically introduce the concept of self-regulation as a mechanism to enforce prohibitions on insider trading in companies. This particularly applies to trading by company insiders (such as directors and employees) in shares of a company prior to significant announcements. In that set of amendments, SEBI prescribed a model code...
Crowd-Funding and Its Regulation
The concept of crowd-funding seems to have caught on. In one form, it involves small and medium-sized companies raising funding from investors using the Internet (usually social networking sites or specialist crowd-funding websites). While the concept itself is quite wide and allows for fund raising in many different contexts, it is particularly useful for small entrepreneurs and start-ups. But...
SEBI Decisions on Public Offerings, Responsibility Reporting
SEBI’s board has taken decisions on certain matters involving public offerings and business responsibility reporting. As far as the public offering process is concerned, some reforms have been introduced to promote the capital markets (e.g. increasing the minimum allotment for anchor investors and creating a separate category of disclosures for venture capital funds and other funds that own...
Commentary on the SEBI Act
Taxmann has just published a legal commentary on the SEBI Act titled “Agrawal & Baby on SEBI Act”. The book has been authored by two serving officers of SEBI, and has been edited by Amit Agrawal (who also occasionally contributes to this Blog as a guest). Bar & Bench has this report.
SAT on “Unpublished Price Sensitive Information”
The Securities Appellate Tribunal last week passed an order on an insider trading case, in which it lays down some guidelines as to the scope of “price sensitive information” under the SEBI (Prohibition of Insider Trading) Regulations, 1992. The specific question pertains to whether “the decision taken by a listed investment company to dispose of a part of its investment is “price sensitive...
Supreme Court’s Silence on “Control” Under the Takeover Regulations
Early last year, the Securities Appellate Tribunal (SAT) had passed an order in the Subhkam case holding that protective provisions in shareholders’ agreements (such as affirmative rights) adopted by investors do not amount to “control” for purposes of the SEBI Takeover Regulations. Although SEBI had initiated an appeal before the Supreme Court, the matter has now been disposed off by the Supreme...
FDI in the Civil Aviation Sector
With the civil aviation industry in India facing concerns on the financing front, calls are being made to liberalise the foreign investment rules in the sector. Of course, that stance has been subjected to criticism on the ground that the foreign direct investment (FDI) policy should not be utilized to bail out certain players in the industry. In any event, there are a couple of issues to be...
Low Take-up Rate on D&O Insurance Policies
The Mint has a report today stating that “only 5-6% of publicly traded companies in India have taken D&O insurance policies, compared with nearly 95% of Fortune 500 companies”. This seems striking considering the fear that various corporate governance episodes in India have generated among directors and managements. One of the key reasons for lack of D&O insurance policies is generally...
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