[Bhavya Solanki is a 4th year B.A., LL.B. (Hons.) student at the Maharashtra National Law University, Mumbai] Shares with differential voting rights [“DVR”], internationally known as dual class shares [“DCS”], are shares which have rights disproportionate to their economic ownership. DVRs include shares with superior voting rights [“SR Shares”] and shares with...
Fractional Ownership: Recommendations for Regulation
[Malavika Devaya is an Associate at Poovayya & Co., Bengaluru] Myre Capital, a fractional ownership platform by Morphogenesis, recently made headlines by raising INR 50 crores for its offering of the integrated township Magarpatta Cybercity. A concept that is fast gaining popularity in India but has been around in developed countries for a while now, fractional ownership is the obvious answer...
Disgorgement: An Equitable Remedy or a Penal Measure?
[Anoushka Biswas is a 3rd Year, B.A. LL.B. (Hons.) student at National University of Juridical Sciences, Kolkata] Disgorgement harbours the principle of giving up the possession of profits illegally obtained, leading to unjust enrichment. Black’s Law Dictionary defines disgorgement as “the act of giving up something (such as profits illegally obtained) on demand or by legal compulsion”. Unjust...
Going for Gold: SEBI Proposes Gold Trading on Exchanges
[Arunimaa Jaiswal is a fourth-year student at Gujarat National Law University, Gandhinagar] Through the Union Budget 2021-22, the Government of India notified the Securities and Exchange Board of India (“SEBI”) as the regulator for gold exchanges in India. Upon such notification and in pursuance of the Government’s intention of establishing regulated gold exchanges in the country, SEBI released a...
AIF Units as ‘Securities’ and its Ripple Effect on Taxation
[Priya Maharishi and Vansh Singla are 4th B.A. LL.B. (Hons.) students at Jindal Global Law School, Sonepat] With the growth of start-ups and early-stage companies, there is a continuous need for long-term capital investments and management expertise. Pooled investment funds can fulfil this need as they have forbearance unlike other sources of capital like public funding. These pooled investment...
SEBI’s ‘Skin in the Game’ Directive – Investor Interest versus Employee Interest
[Aman Jha is a third-year student at National Law University, Delhi and Anurag Shah is a fourth-year student at School of Law, Christ University Bangalore] The Securities and Exchange Board of India (“SEBI”), through a circular dated April 28, 2021, has directed Asset Management Companies (“AMCs”) to compensate its key employees partly in the form of units of the mutual fund schemes managed by...
The Reliance Open Offer Penalty: ‘Unexplained’ Delays in Regulatory Action
Shikhar Aggarwal is a 3rd year B.A.LL.B. (Hons.) student at National Law University, Delhi] On 7 April 2021, the Adjudicating Officer (“AO”) of the Securities and Exchange Board of India (“SEBI”) imposed a monetary penalty of ₹25 crore jointly on 34 entities, including brothers Mukesh and Anil Ambani and other promoters of Reliance Industries Limited (“RIL”), for their failure to comply with the...
The Proposed Single Securities Markets Code
In the Budget 2021 speech, the Finance Minister announced a proposal “to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code.” When implemented, this would represent a significant step in the modernization of securities regulation in India. In my...
India’s Attempt to Regulate SPACs: Sponsors in the Spotlight
[Anushri Uttarwar is a 4th year law student at O.P. Jindal Global University] On March 11, 2021, the Securities and Exchange Board of India (“SEBI”) formed a group of experts to study the viability of introducing structures like special purpose acquisition companies (“SPACs”) in India. Contrary to SEBI’s guarded position, the International Financial Services Centre Authority (“IFSCA”) has already...
SEBI’s Consultation Paper Makes Minority-Shareholder Friendly Proposals on Independent Directors
The Securities and Exchange Board of India (“SEBI”) has released a consultation paper making minority-shareholder friendly proposals mainly relating to independent directors (“IDs”). The paper proposes a dual-approval process for appointment and removal of IDs, which includes a “majority of minority shareholders” approval. If this approval is not received, a...
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