[Saksham Chaturvedi is a 5th year law student at National Law University, Odisha] A division bench of the Supreme Court in DBS Bank v. Ruchi Soya has referred an issue concerning the interpretation of the amended section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016 (IBC) to a larger bench. The question before the bench in DBS Bank was whether, as per the amended section 30(2)(b)(ii) of...
Business Judgment Rule: The Indian Context
[Bharat Vasani is Senior Advisor – Corporate laws at the Mumbai office of Cyril Amarchand Mangaldas. An earlier version of this post was published on the Cyril Amarchand Mangaldas Blog] The business judgment rule is a legal presumption evolved by Delaware courts. The presumption is that while making business decisions, directors of a company act in good faith, on an informed basis and in the...
Navigating the Regulatory Maze: The Imperative for Harmonized Decision-Making in SEBI
[Philip Oommen is a lawyer based in Mumbai, and a graduate of the National Institute of Securities Markets] The regulatory landscape of the Indian securities market currently exhibits a noticeable lack of uniformity, as demonstrated by the divergence in decisions rendered by the Securities and Exchange Board of India (“SEBI”). This divergence in decision-making underscores the inherent...
Revolutionizing Trade Settlement: SEBI’s Progressive Push for T+0 and Instant Settlement
[Smruti Kulkarni and Manas Rohilla are 3rd year students at Gujarat National Law University, Gandhinagar] On 22 December 2023, the Securities and Exchange Board of India (SEBI) issued a consultation paper on “Introduction of optional T+0 and optional Instant Settlement of Trades in addition to T+1 Settlement Cycle in Indian Securities Markets”. The paper analyses feasibility and desirability of...
Regulating the Unregulated: RBI’s Proposed Regulatory Framework for the Fintech Sector
[Daksh Kasliwal and Shubham Sehgal are 3rd year law students at Gujarat National Law University, Gandhinagar] Over the past decade, India’s fintech industry has been experiencing a remarkable growth trajectory and has emerged as the third largest fintech economy in the world. WEF, in its study, has placed India alongside the United Kingdom, the United States, and Singapore as “the most...
Navigating Vulnerabilities: SEBI’s Circular on Trading Account Security
[Snigdha Dash is a 3rd year B.A.LL.B.(Hons.) student from National Law University, Odisha] The market’s abundance of traders, providers, platforms, brokers, and communication channels has created an environment susceptible to potentially malevolent activities. Exploiting vulnerabilities to gain unauthorized access to trading accounts and execute illicit transactions, such as in currency trading...
The Self-Regulatory Paradigm for FinTechs: A Critical Analysis
[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...
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