The latest issue of the NALSAR Student Law Review (which is available online) carries a number of articles that may be relevant to readers of this Blog. Here is a list of those: – Regulation and Responsibility of Credit Rating Agencies vis-a-vis the Current Economic Crisis- A Comparative Analysis – Rethinking the Linkages Between Foreign Direct Investment and Development: A Third...
FDI in Multi-brand Retailing
The Government has reopened the debate on allowing foreign investment in the multi-brand retail sector. A discussion paper issued yesterday reviews existing studies conducted by the Government and other entities on this topic and also examines the experience in other emerging markets. The rationale for FDI in the retail sector is set out as follows: 6.1 The Agriculture sector needs well...
Trends in Private Equity Investment Structures
1. A report in the Mint demonstrates the popularity of convertible instruments over plain-vanilla equity when it comes to investments by private equity firms. 2. A post on New York Times’ Deal Professor Blog discusses trends in contractual structures for private equity investments from a broader perspective in the wake of the financial crisis. Most of those structures, however, are in the context...
More on the Pricing Guidelines for Foreign Investment
(The following post is contributed by Raghav Sharma, who is an associate with a law firm in Delhi) This post relates to Mr. Somasekhar Sundaresan’s article titled “RBI cuts sorry figure over norms for share transfers” wherein the author has highlighted certain ambiguities arising from the Reserve Bank of India’s (“RBI”) A.P. (DIR Series) Circular No. 49 dated May 4, 2010 (the “May Circular”)...
The Impact of Tightening Financial Regulation
The last week has witnessed tighter financial regulations emerging out of the U.S. and European markets. While some of the reforms are expected to result in migration of investments into more liberal markets in Asia (including India), others represent introduction of stringent measures that are already in place in India. Possible Regulatory Arbitrage First, the European Union finance ministers...
Changes to Minimum Pricing Norms for Transfers of Indian Securities
(In his previous post, Tanmay Amar examined the new base pricing norms for issue of securities by Indian companies to non-resident investors. He now follows it up with an analysis of the new RBI circular, which is hot off the press, that amends pricing norms for transfers of securities between a resident investor and a non-resident investor) Introduction This post discusses the revised guidelines...
FDI in Trusts
(In the following post, Abhishek Tripathi, an independent legal practitioner, and Mani Gupta, an Associate at Luthra & Luthra examine some complexities in the regulations pertaining to FDI in trusts) The recently notified Consolidated FDI Policy of the Government of India (“FDI Policy”), in para 3.3.3, prescribes that ‘FDI in Trusts other than VCF is not permitted.’ This is an insertion that...
Changes to Minimum Pricing Norms for FDI in Unlisted Companies
(The following post is from Tanmay Amar, senior associate at Luthra & Luthra. Tanmay discusses a significant change to the minimum pricing norms for issue of shares by Indian companies to foreign investors. This change is bound to affect the manner in which valuations are to be arrived at, especially for investments by financial investors such as private equity funds. It is not clear as to...
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:...
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...
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