Generally, in a takeover or other form of transaction involving mergers and acquisitions (M&A), there could be broadly two types of disputes. The first type arises if the companies involved have failed to comply with the requisite procedures for undertaking the transaction, which ultimately adversely affects the interests of the shareholders. This would give rise to a cause for the...
SEBI’s Informal Guidance Affirms Expansive Nature of Insider Trading Code of Conduct
The Securities and Exchange Board of India (SEBI) (Prohibition of Insider Trading) Regulations, 2015 (the “PIT Regulations”) have undergone refinement since their enactment. Earlier this year, SEBI introduced changes by way of the SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018 that came into effect on 1 April 2019. The amendments to the PIT Regulations clarify that the...
Director Liability: Nexus with Role and not Position
[Pammy Jaiswal is a Partner at Vinod Kothari and Company, and can be reached at [email protected]] While there have been an increasing number of rulings on the liability of directors, the question that mostly came up for examination related to their involvement in the day-to-day operations of the company. The liability of non-executive directors has mostly been scanned to evaluate their...
Rationalization of Participatory Notes: SEBI’s Regulatory Conundrum
[Tushar Oberoy and Rishabh Sharma are 4th Year, BA.LL.B. (Hons.) students at NALSAR University of Law, Hyderabad] In 2017, the Securities and Exchange Board of India (SEBI) had released a circular which practically rendered participatory notes (P-Notes) futile as an instrument for investment in India. The circular stated that foreign portfolio investors (FPIs) could not issue overseas derivative...
Mergers or Demergers involving Listed Transferor Companies and Unlisted Transferee Companies
[Aishwarya Singh is a lawyer based in Mumbai. The views expressed in the article are personal.] This post discusses the regulatory framework relating to mergers or demergers involving a listed company and an unlisted company, wherein the whole or part of the undertaking, property or liabilities of a listed company, being the transferor company, are transferred to an unlisted company, i.e., the...
A Critique of SEBI’s Proposed Amendment to the Credit Rating Regulatory Framework
[Rongeet Poddar is a final year B.A. LLB (Hons.) student at the West Bengal National University of Juridical Sciences] The objective of credit rating agencies (CRAs) is to reduce information asymmetry by facilitating investors to form an informed opinion on the credit-worthiness of a debt instrument. The Report of the Committee on Comprehensive Regulation for Credit Rating Agencies released by...
SEBI Committee on Regulating Proxy Advisors
Over the last decade, India has witnessed considerable shareholder activism in that shareholders, particularly institutions, have become more active in exercising their corporate franchise. Proxy advisory firms have formed an integral part of this movement, as they provide advice to both institutional and individual shareholders on how they may exercise votes at shareholder meetings of companies...
SEBI’s DVRs Framework: How Will the Indian Market React to a Super Voting Stock Structure?
[Sarthak Sharma and Aabha Dixit are 3rd year and 4th year students respectively at Hidayatullah National Law University, Raipur] The Securities and Exchange Board of India (SEBI) on 27 June 2019, after much deliberation, approved the issuance of shares with differential voting rights (DVRs) and issued a framework governing issuance and listing of shares with DVRs. Prior to this, whilst issuance...
Lessons from L&T’s Takeover of Mindtree: Can Differential Voting Rights Aid Promoters in Peril?
[Rongeet Poddar is a final year B.A. LLB (Hons.) student at West Bengal National University of Juridical Sciences] A hostile takeover is a rare occurrence in the Indian market because of the stringent control of promoter-families over companies and concentrated shareholding patterns in India. L&T’s hostile takeoever of IT services firm Mindtree however is an exception to this general trend...
SAT Order: Stock Exchanges not to Follow SEBI’s Circulars and Directions Mechanically
[Anand Narayan is a corporate and securities lawyer currently working as an in-house counsel in Mumbai] One has lately witnessed a trend that the stock exchanges, such as NSE, BSE and NCDEX, are following the circulars and directions issued by the Securities and Exchange Board of India (SEBI) mechanically without application of mind, which has not gone down well with the market participants. Much...
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