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 Effect of an Increased Free Float on India’s Promoter-Controlled Companies
[Shiluti Walling is a 4th year B.A., LL.B. (Business Law Hons.) student at National Law University, Jodhpur] The Union Finance Minister recently proposed the increase of the minimum public shareholding (MPS or free float) from 25% to 35%. Prior to the proposal, public shareholders of a listed company were required to hold at least 25% of the paid-up capital of the company as free float, pursuant...
Shareholding Patterns and Director’s Duty of Loyalty: Comparative Analysis of India and the US
[Ishani Mookherjee is a 3rd year B.A. LLB (Hons.) student at Jindal Global Law School] The Delaware Supreme Court, in Cede v. Technicolor Inc., examined the applicability of the business judgment rule in the United States (US). For a business decision to be protected by this rule, two conditions have to be satisfied – the duty of loyalty and the duty of reasonable care. This creates a...
SEBI Circular on Minimum Public Shareholding
[Sarthak Karol is an associate at a law firm in Mumbai] By way of a Circular dated October 10, 2017, (“Circular”), the Securities and Exchange Board of India (“SEBI”) issued directions to stock exchanges to come down heavily on listed entities, their promoters and directors who are in breach of the 25% minimum public shareholding (“MPS”) norms mandated under regulation 38 of the SEBI (Listing...
Promoter Shareholdings in Indian Companies
That concentration of shareholdings in public listed companies is the norm is beyond doubt. At the same time, studies have been seeking to ascertain the level of shareholdings held by controlling shareholders (or promoters). Some such studies are set out below: (a) A study by Rajesh Chakrabarti shows average promoter shareholdings in Indian companies in...
Analysis of the New SEBI Promoter Re-classification Norms
[The following guest post is contributed by Shashank Prabhakar, a Senior Associate with Finsec Law Advisors. These are the author’s personal views] Shareholders in a listed company are classified under two broad categories, i.e., those that belong to the promoter / promoter group and those shareholders who are members of the public with no familial or formal business ties with the promoter /...
A Study on Ownership Concentration in Indian Companies
The shareholding pattern of Indian companies has been the subject matter of academic studies, which have consistently shown that Indian companies are controlled substantially by controlling shareholders (or promoters) who hold a significant percentage of shares in public listed companies. The promoters range from business families to the state and to multinational corporations (MNCs). For a...
Takeover and Compliance with Minimum Public Shareholding
A recent informal guidance issued by the Securities and Exchange Board of India deals with the questions pertaining to the intersection of the SEBI Takeover Regulations of 2011 and the process of complying with the minimum public shareholding in listed companies. In the case involving R Systems International Limited, the acquirer made an open offer and acquired certain shares of the target...
Update on Delisting of Fresenius Kabi Oncology Limited
[The following post is contributed by Yogesh Chande, who is a Consultant with Economic Laws Practice, Advocates & Solicitors. Views of the author are personal] On 22 July 2013, the SEBI whole time member passed an order in relation to the proposed voluntary delisting of Fresenius Kabi Oncology Limited (Target Company) by its promoters in accordance with the SEBI (Delisting of Equity Shares)...
SAT Order on Minimum Public Shareholding Norms
The Securities Appellate Tribunal issued its order in the case involving compliance of the public shareholding norms in Gillette India Limited. Gillette had filed an appeal against an order of the Securities and Exchange Board of India (SEBI) rejecting Gilette’s proposal for compliance with the public shareholding norms. However, SAT dismissed Gillette’s appeal in an order that extensively...
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