Readers may recall the controversy surrounding a circular that the Securities and Exchange Board of India (SEBI) issued in August 2017 to all listed companies requiring them to make a public disclosure to the stock exchanges within one working day of defaulting on loans and other financial facilities. In a blog post then, I had discussed the rationale for SEBI’s move. However, the circular came...
SAT Rules on “Materiality” of Disclosures
A somewhat peculiar fact situation arose for consideration of the Securities Appellate Tribunal (SAT) in Electrosteels Limited v. Securities and Exchange Board of India (order dated 14 November 2019). Electrosteel Limited (ESL) embarked upon an initial public offering (IPO) in 2010. ESL’s parent is Electrosteel Castings Limited (ECL), a public listed company. Since iron ore is an essential raw...
Social Stock Exchange – A Breakthrough for the Impact Investing Sector
[Aditya Bhayal is a IV year student at NALSAR University of Law, Hyderabad] In this year’s Budget Presentation, the Finance Minister announced the introduction of the Social Stock Exchange (SSE) in the Indian capital market. Following this, the Securities and Exchange Board of India (SEBI) recently set up a panel to provide recommendations on the working and implementation of this concept. In...
Scope of Appeals against SEBI’s Disposal of Investor Complaints
The Securities and Exchange Board of India (SEBI) has established the “SEBI Complaints Redress System” (SCORES) for receiving investor complaints in respect of listed companies, collective investment schemes and other SEBI-regulated entities. The question of whether an appeal lies from SEBI’s disposal of an investor complaint through SCORES came up for consideration before the Securities...
The Foibles of a Databank and Proficiency Test for Independent Directors
There is no gainsaying that board independence has come to assume a pivotal position in corporate governance. Although it continues to receive constant criticism on account its ineffectiveness, no one musters the courage to banish it or even diminish its importance. While the concept of independent directors only gradually received the required attention and seriousness in India, it has been the...
Takeover Offer Price and the Valuation Conundrum
Generally, in a takeover or other form of transaction involving mergers and acquisitions (M&A), there could be broadly two types of disputes. The first type arises if the companies involved have failed to comply with the requisite procedures for undertaking the transaction, which ultimately adversely affects the interests of the shareholders. This would give rise to a cause for the...
Delhi High Court Rules on Disqualification of Directors
In order to address the scores of shell companies in existence, the Ministry of Corporate Affairs (MCA) introduced a range of measures in the wake of the 2017 demonetization exercise. One of them pertains to the disqualification of directors in companies that have failed to file financial statements or annual returns for a continuous period of three financial years, as prescribed under section...
Steering Committee Report on Digital Lending: Issues and Solutions
[Richa Saraf is a Legal Advisor at Vinod Kothari Consultants Pvt. Ltd.] The Department of Economic Affairs has recently released the Report of the Steering Committee on Fintech Related Issues, which discusses the various issues faced by fintech companies. This post seeks to focus on the issues pertaining to online lending, and the recommendations offer by the Steering Committee to address the...
Promoter Cannot Initiate Restructuring Scheme for Insolvent Company
In an earlier post, I had noted the revival of the scheme of arrangement as a restructuring tool for companies that have been taken into liquidation under the Insolvency and Bankruptcy Code, 2016 (IBC). In the cases discussed therein, the adjudicatory authorities sought to encourage the parties to use the scheme to attempt a revival of the company before certifying its demise. Among the leading...
Qualifying test requirements for Independent Directors – a hasty, slipshod & cumbersome requirement
I have written a piece for Moneylife on the new requirements of the Ministry of Corporate Affairs for independent directors that mandate existing as well as first-time independent directors to enrol in a databank as also pass certain qualifying test. The Rules, that are spread over several notifications and also an FAQ, come into force from 1st December 2019 and some transition period is also...
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