In a somewhat unconventional order, SEBI has on April 20, 2010 issued “advisory instructions” in a matter involving the Bombay Stock Exchange Limited (“BSE”). It arises out of a letter by the BSE to SEBI dated July 2, 2004 containing a proposal to introduce a market making scheme in the derivatives segment of the exchange. A unique feature of the scheme proposed by BSE was that it would reimburse...
SEBI’s Order on ULIPs: A Misfired Shot? – Part II
(This is in continuation of Abhishek Tripathi’s previous post, and it examines the regulation of ULIPs in the backdrop of the reasoning adopted by courts in the Commonwealth) Insurance Act regulates companies engaged in any class of insurance business, and requires such companies to register themselves with the IRDA prior to commencing any insurance business. ‘Life insurance business’ has been...
SEBI’s Order on ULIPs: A Misfired Shot? – Part I
(The ULIP controversy has stirred an intense debate on the nature of instrument that it represents and consequently as to which regulator has purview over it. Jayant Thakur has previously analyzed the outcome of SEBI’s order in detail (here and here). Going by the developments following SEBI’s order, the legal issues surrounding ULIPs appear to constitute a classic case where reasonable minds may...
FDI Policy – Static or Dynamic?
Earlier this month, we had briefly discussed the Consolidated FDI Policy issued by the Government. The policy, which is meant to be exhaustive, would be subject to review every six months, with the first review due on September 30, 2010. The Business Standard has an incisive editorial about certain intervening events that already signal policy changes within the first month of its introduction:...
SEC’s Restrictions on Short Selling in Melting Scrip
(The following post has been contributed by Ravichandra S. Hegde of J. Sagar Associates) The Securities and Exchange Commission (“SEC”) in February 2010 has amended Rule 201 of the SHO Regulations[1] framed under the Securities Exchange Act of 1934 (“Act”) restricting abusive short sale in the falling scrip thereby retaining investor confidence. The amendment effected to Rule 201 is primarily...
Consolidated FDI Regime Operational
As we had discussed in December 2009, the Government had proposed a draft master press note to consolidate the regime relating to foreign direct investment (FDI). The consolidation exercise has now fructified with the issue of the Consolidated FDI Policy (Circular 1 of 2010), which takes effect from April 1, 2010. The policy document itself contains evidence of the complexity that has afflicted...
Taxation of Derivative Transactions by FIIs
(The following post has been contributed by Ravichandra S. Hegde of J. Sagar Associates) Profits earned from derivative transactions are business income, not liable to be taxed in India at the hands of the FII: AARThe Authority for Advance Rulings (“AAR”), Income Tax, in its recent decision dated March 22, 2010 has held that the special provision in the Income Tax Act, 1961 (“the Act”) cannot be...
IDR Offering Document
Here is the draft red herring prospectus for the first ever offering of Indian depository receipts (IDRs) proposed by Standard Chartered Bank. Particularly interesting is the section titled “Frequently Asked Questions on the IDR Facility” on pages 42-51 that provides details of operation of the IDR mechanism.
Governance Norms for Central PSUs
In 2007, the Central Government issued the Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs). This was a measure introduced to bring corporate governance norms in CPSEs on par with the private sector. However, it was only a voluntary measure. On March 25, 2010, the Government announced that the Guidelines would now be continued on a mandatory basis. Hence, all CPSEs...
Air Travel, International Airlines and Liabilities
(The following post comes to us from Sumit Agrawal, who is an alumnus of the National Law University, Jodhpur and associated with the Securities and Exchange Board of India (SEBI) as Legal Officer in its Integrated Surveillance Department. Views expressed herein are his own. Email: [email protected]) Losing luggage on foreign land is a life-time experience, especially when you are about...
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