It is a well-known fact that schemes of arrangement are a popular method to implement mergers and corporate restructuring transactions in India. While they involves an elaborate and cumbersome procedure and the oversight of the court, parties enjoy tremendous flexibility in structuring their transactions. More importantly, such a scheme is binding on the dissenting minority. When this involves...
Materiality and Disclosure Under Clause 36 of the Listing Agreement
[The following guest post is contributed by Supreme Waskar, who is a corporate lawyer] By an order passed earlier this month, an adjudicating officer of SEBI imposed a fine of Rs. 2 crores on New Delhi Television Ltd. (“NDTV”) for failure to promptly disclose material information to stock exchanges under clause 36 of the listing agreement. Facts of the case On February 21, 2014, NDTV had received...
The Efficacy of a Listing Platform for Start-Ups
Last week, SEBI issued a discussion paper on “Alternate Capital Raising Platform and Review of Other Regulatory Requirements”, which is aimed at providing start-up companies the facility of listing their securities on a trading platform without going through the extensive onerous and listing requirements that might be applicable in the normal course. This is explicit recognition of the need to...
SEBI Reforms – Part 3: From Listing Agreement to Listing Regulations
In most jurisdictions, several aspects of corporate governance and disclosures for listed companies are regulated through stock exchange listing requirements. These apply only to listed companies, and they are enforced by the stock exchanges. Operating as conditions to continuous listing, one of the enforcement mechanisms used is the threat (sometimes carried out) of delisting the securities...
Disclosure of “Encumbrances” on Shares
Recently, the Securities Appellate Tribunal (SAT) had to deal with two separate situations pertaining to the disclosure of pledge or other encumbrance over shares. In an order discussed earlier today, the SAT found that the acquisition of shares by a public financial institution through the invocation of a pledge was required to be disclosed in accordance with SEBI’s Takeover Regulations...
Scheme of Arrangement – Revised requirements for the stock exchanges and listed companies
[Yesterday, we had the opportunity to provide a brief analysis here on SEBI’s new circular on the topic. In the following post, Yogesh Chande points to some ambiguities regarding the scope of SEBI’s new circular. Yogesh is a Consultant, Economic Laws Practice, Advocates & Solicitors. Views expressed by the author are personal] This post pertains to the circular issued by Securities and...
Stringent Procedures for Schemes of Arrangement Involving Listed Companies
For the last few years, there has been a perceptible concern on the part of the Securities and Exchange Board of India (SEBI) that companies have been utilizing the facility of schemes of arrangement available under Sections 391-394 of the Companies Act, 1956 to effect various types of transactions, some of which may not be in the interest of minority shareholders. SEBI has sought to introduce...
Amendments to Equity Listing Agreement
Earlier this month, SEBI issued amendments to the Equity Listing Agreement. The amendments have been discussed in the SEBI Updates Blog. There are a number of procedural changes, including requirements regarding reporting of shareholding patterns of listed companies and announcements regarding significant corporate events. More importantly, clause 40A of the listing agreement has been amended to...
Governments as Issuers of Securities
As we have been constantly focusing on this Blog (here, here and here), public sector enterprises (PSEs) in India that are substantially owned by the Government often take advantage of relaxations and special dispensations from the applicability of securities laws and corporate governance norms that otherwise apply in their entirety to their private sector counterparts. Even where actions have...
Relaxation of Free Float Requirement
Earlier, on June 4, 2010, the Ministry of Finance introduced a requirement that all listed companies must have a public shareholding of 25%. This was to bring about uniformity and create a level playing field for all listed companies, and was the result of detailed deliberations that spanned several years. Although the rule was met with consternation by industry due to the ensuing possibility of...
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