[Karthika S. Babu and Snigdha are 3rd year B.A., LL.B. students at Gujarat National Law University, Gandhinagar] In an attempt to align the pace of regulatory oversight with the exponential rate at which fintech is revolutionising the financial services environment, the Reserve Bank of India (“RBI”) recently released the much debated Draft Framework for Self-Regulatory Organisation(s) in the...
Navigating the Maze: Scrutinising SEBI’s Framework for Short Selling
[Garv Arora and Vatsal Jain are 3rd year B.A., LL.B. (Hons.) student at HNLU, Raipur] By way of its circular titled ‘Framework for Short Selling’ dated January 5, 2024 (the ‘Circular’), the Securities and Exchange Board of India (‘SEBI’) has laid down a definitive framework to better regulate short-selling transactions in the Indian stock market. Short selling is a trading activity that focuses...
Resolution Professional as the Occupier: A Recipe for Disaster?
[Tanish Arora is a 3rd year B.B.A.LL.B. student at National Law University Odisha] In December 2023, the Madras High Court in Subrata Monindranath Maity v The State, Represented by Deputy Director, Industrial Safety and Health-II stipulated that a person who is the resolution professional (“RP”) in respect of an establishment is also an occupier under the Factories Act, 1948. Hence, the RP would...
Grounds of Arrest: Navigating Section 19 of the PMLA
[Esha Rathi is a final year B.B.A. LL.B. (Hons.) student at Jindal Global Law School] Section 19 of the Prevention of Money Laundering Act 2002 (PMLA) empowers authorized officials of the Directorate of Enforcement (ED) to arrest persons based on the material in their possession, providing a reasonable basis to suspect that an individual has committed an offence punishable under the law. It...
Empowering Investors: SEBI’s Game-Changing Circular on Trading Account Control
[Nikita Singh and Aishana are the third year law students at Gujarat National Law University.] The Indian stock broking industry is undergoing a major change with the introduction of a new facility for investors to voluntarily freeze or block their online access to their trading accounts. This facility, which was introduced by the Securities Exchange Board of India (SEBI) on 12 January 2024...
Beyond the Hype: Risks and Regulations in Binary Options Trading
[Shaswat Kashyap is a 3rd-year student at Gujarat National Law University and Snigdha Dash a 3rd-year student at National Law University, Odisha] A post late last year on Money Control highlighted a disquieting trend where certain financial influencers (finfluencers) are endorsing binary-trading platforms that the Reserve Bank of India (RBI) has blacklisted. Social media profiles with significant...
A Proposed Enforcement Mechanism for Foreign-Seated Interim Orders in India
[Abhisar Vidyarthi is a BCL student at the University of Oxford and Pragya Agarwal is an advocate practising in New Delhi] Arbitration law in India is gearing towards another round of reforms as the Indian government has set up a high-level expert committee to recommend reforms to the [Indian] Arbitration & Conciliation Act, 1996. The terms of reference of the Expert Committee, among other...
Navigating the Doctrine of Election under the IBC
[Akshita Shrivastava is a IV year B.A.LL.B. (Hons.) student at National Law Institute University in Bhopal (M.P.)] The doctrine of election, a fundamental principle in evidentiary law, has been a subject of extensive discussion and legal interpretation in recent times, particularly in its application within the intricate landscape of insolvency and bankruptcy proceedings. This doctrine comes into...
Fast-Track Revolution: SEBI’s Consultation Paper on Reforms in the Debt Securities Market
[Nikita Singh and Aishana are third year BSW LLB students at Gujarat National Law University, Gandhinagar] As a response to the Budget’s (2023-24) emphasis on simplifying regulations, reducing compliance costs, and fostering a business-friendly environment, financial sector regulators are actively reviewing existing frameworks. A dedicated working group i.e. Corporate Bonds and Securitization...
Judicial Odyssey of MFN Clauses: Analysing AO v. Nestle SA
[Akarshi Narain and Harshitha Adari are third-year law students at NALSAR University of Law, Hyderabad] In October 2023, the Supreme Court of India resolved a prolonged dispute in AO v. Nestle SA over the interpretation of the Most Favored Nation (MFN) clauses in Double Taxation Avoidance Agreements (DTAAs). A Delhi High Court case has further echoed its commitment to the verdict and dismissed...
Adani-Hindenburg Saga: Unraveling the Market Turmoil and Regulatory Response
[Dhaval Bothra and Anoushka Das are law students at Symbiosis Law School, Pune] On January 24, 2023, Hindenburg Research LLC released a report accusing the Adani group of fraudulent activities and market manipulation, leading to a significant decline in the share value of Adani companies. The Hindenburg report had a substantial impact on the Indian securities market, causing a stock plunge and...
Buyback Consideration Pre-115QA: Deemed Dividend or Capital Gains?
[Shaswat Kashyap and Harshal Chhabra are students at Gujarat National Law University] The buyback of shares involves a company repurchasing its shares and other specified securities issued by the company. This approach has consistently been a favoured means for Indian companies to distribute accumulated profits among their shareholders. Buybacks are also considered to be more tax-efficient when...
The Paradigm Shift in AIF Units: Navigating the Transition to Dematerialisation
[Vidisha Tanna and Sonali Nagariya are 5th-year BLS LLB students at SVKM’s Pravin Gandhi College of Law, Mumbai] In the ever-evolving landscape of Indian financial markets, the move towards dematerialisation of units of alternative investment funds (“AIFs”) marks a significant regulatory stride. The SEBI (Alternative Investment Funds) Regulations, 2012 have heralded a new era where AIFs, an...
Transforming the Financial Landscape: RBI’s Overhaul of Forex Authorization Framework
[Harshal Chhabra and Shaswat Kashyap are 2nd year and 3rd year students respectively at Gujarat National Law University] In response to the dynamic shifts in the financial landscape, the Reserve Bank of India (the RBI) on 26 December 2023 introduced a draft licensing framework for Authorized Persons (APs) under the Foreign Exchange Management Act, 1999 (the Act). This move signifies a pivotal...
Handling the Rumour Mill: SEBI’s Market Rumour Verification Reforms
[Gyanesh Mishra is a third year B.B.A LL.B (Hons.) student at National Law University, Odisha] The Securities and Exchange Board of India (“SEBI”), through a consultation paper released on 28 December 2023, proposed substantial reforms to enhance the regime surrounding the verification of market rumours. The reforms propose to change the existing material event criteria under the regulation 30 of...
Revolutionizing Finance: RBI’s Bold SRO Framework Unveiled
[Dhaval Bothra and Rajdeep Bhattacharjee are law students at Symbiosis Law School, Pune] The Reserve Bank of India (“RBI”) recently unveiled the “Draft Omnibus Framework for recognising Self-Regulatory Organisations (“SROs”) for Regulated Entities (“REs”)”, which represents a significant change in recognizing SROs for REs under its authority. The Draft Omnibus Framework outlines the essential...
Navigating Jurisdictional Waters: The Controversy Surrounding NFRA’s Retrospective Oversight
[Anish Gupta is a 3rd year B.A., LL.B. (Hons.) student at the National Law School of India University, Bangalore] In the recent case of Harish Kumar v. National Financial Reporting Authority (NFRA), the National Company Law Appellate Tribunal (NCLAT) has held that the NFRA has ‘superior authority’ to oversee auditors of listed and large companies on disciplinary matters over the Institute of...
RBI’s SRO Framework: Shaping Responsible Growth in the Indian Financial Sector
[Shaswat Kashyap and Anand Vardhan are third-year law students at Gujarat National Law University] With the ever-growing adoption of innovative technologies, coupled with the rapid growth of regulated entities, it is becoming cumbersome for the Reserve Bank of India (“RBI”) to effectively regulate the sector. Self-regulatory organizations (“SROs”) can provide a vital link between the regulator...
The RBI’s Watchful Eye on AIFs: Navigating Conflict and Evergreening Risks
[Dhaval Bothra is a law student at Symbiosis Law School, Pune] As the chief regulator of financial institutions, the Reserve Bank of India (“RBI”) oversees varied entities from commercial banks to non-banking financial companies, ensuring prudent behaviour and protecting the interests of investors. Among the plethora of financial instruments under its purview, alternative investment funds...
Unravelling the Rights of Successors vis-à-vis Nominees to the Shares of a Company
[Snigdha is a 3rd year B.A., LL.B. student at Gujarat National Law University, Gandhinagar] The Supreme Court on 14 December 2023 in Shakti Yezdani v. Jayanand Jayant Salgaonkar settled the position of conflict between the rights of a nominee under section 109A of the Companies Act, 1956 (the “Act”) and that of a successor to the shares/securities of a company. The Court clarified the...
A Faster Track for Debt Financing: Examining India’s Proposed Public Issuance Framework
[Dhaval Bothra and Rajdeep Bhattacharjee are students at Symbiosis Law School, Pune] The Indian corporate debt market, while exhibiting notable dynamism, grapples with a critical challenge: the stark predominance of private placements. This overreliance on opaque transactions significantly restricts public participation and impedes overall market development. Recognizing this constraint, the...
Dodging Criminal Liability Through Mergers & Amalgamations
[Suraj Chaudhary and Ravishekhar Pandey are practising advocates at the Bombay High Court, and specialise in commercial disputes] Netflix’s Railway Men this November has refreshed the public memory of the Bhopal Gas Tragedy in 1984. In March this year, given its limited curative jurisdiction, the Supreme Court had no choice but to reject the application for enhancement of compensation to the...
Replacement of a Liquidator under the IBC: The End of Independence?
[Sannah Mudbidri is a 3rd year BA LLB (Hons.) student at National Law School of India University, Bangalore] The landscape of liquidator replacements under the Insolvency and Bankruptcy Code, 2016 (IBC) has witnessed a transformative journey, marked by the historical authority vested in the adjudicating authority and amendments to the Insolvency and Bankruptcy Board of India (IBBI) regulations...
Group of Companies Doctrine: Judgments Implicitly Overruled in Cox & Kings
[Varun Srinivasan is an advocate practising in New Delhi and is a junior in the chambers of Mr. Gaurav Pachnanda SA] The five-judge decision of the Supreme Court in Cox & Kings Ltd v. SAP India Pvt Ltd 2023 INSC 1051 has already been well summarized here and some of its implications are discussed here. The focus of this post is to recognize some of Cox & Kings’ more subtle contributions...
Smaller Ticket Sizes: Decoding SEBI’s Corporate Bond Market Reform
[Shalin Ghosh is a 2nd year B.A.,LL.B. (Hons.) student at Maharashtra National Law University, Mumbai] The Securities and Exchange Board of India (“SEBI”), through a consultation paper released on 9 December 2023, proposed a slew of reforms to spur the growth of the Indian corporate bond market. One of those reforms concerns permitting companies to issue non-convertible debentures (“NCDs”) and...
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