[Bharat Vasani is Senior Advisor – Corporate laws at the Mumbai office of Cyril Amarchand Mangaldas. An earlier version of this post was published on the Cyril Amarchand Mangaldas Blog] The law on related party transactions (“RPTs”) has been evolving since its inclusion in the Companies Act, 2013 (“the Act”) and the introduction of stricter regulations for listed companies by the Securities and...
The SEBI-RBI Conflict: Regulatory Gridlock in NBFC Takeovers
[Akshay Dhekane is a 5th year B.A., LL.B. (Hons.) student at National Law University Delhi] In the Indian markets, hostile takeovers are a potent but rare strategy to gain control over companies. Recognizing their importance the Supreme Court in Pramod Jain v SEBI held: “A hostile takeover helps to unlock the hidden value of the shares and puts pressure on the management to work efficiently”...
SEBI’s New Consultation Procedure for Making Regulations
As the regulator of India’s capital markets, the Securities and Exchange Board of India (“SEBI”) performs the role of a mini-state in that it exercises the powers of the legislature, executive, and judiciary, all vested in a single authority. Over the last three decades of its existence, SEBI has enacted regulations on nearly every single aspect of India’s capital markets. Its regulation-making...
Regulation vs. Reality: Is SEBI Pushing Category-II AIFs into Obsolescence?
[Khushi Patel and Kritika Jain are 3rd year BBA LLB (Hons.) students at Gujarat National Law University, Gandhinagar] Earlier this month, SEBI proposed amendments to regulation 17(a) of the SEBI (Alternative Investment Funds) Regulations, 2012 (the ‘AIF Regulations’), allowing category II alternative investment funds (AIFs) to meet their 50% unlisted investment requirement by including listed...
Redefining Oversight: SEBI’s Crackdown on ODIs and the Pursuit of Financial Transparency
[Kashvi is a second-year law student at National Law University Odisha and Divyansh is a third-year law student at National Law School of India University] Offshore derivative instruments (ODIs) have been a point of contention in India’s regulatory landscape for over 15 years. These instruments allow foreign investors to trade Indian securities without the need for registration with the...
SAT’s Order in Pegasus: Dispensing with Valuations in Indirect Acquisitions?
[Shalin Ghosh is a 3rd year B.A., LL.B. (Hons.) student at Maharashtra National Law University, Mumbai] Indirect acquisitions involve an acquirer obtaining control in the target company by taking over an intermediary entity which already holds a controlling stake in the target. This transaction structure does not result in any change in the target’s public shareholding. However, such acquisitions...
Casting a Wider Net: SEBI’s Expanded Definition of “Connected Person” and “Relatives”
[Priyanshi Jain is a 5th year student at Institute of Law, Nirma University and Akhand Singh is a 3rd year student at Institute of Law, Nirma University] The Securities and Exchange Board of India [“SEBI”] on December 4, 2024 notified an amendment to the SEBI (Prohibition of Insider Trading) Regulation, 2015 [“PIT Regulations, 2015”] by way of the SEBI (Prohibition of Insider Trading) (Third...
Weighing SEBI’s Approaches to Diversify the Ownership of Clearing Corporations
[Vaibhav Gautam is a third year student at NALSAR University of Law, Hyderabad] Clearing corporations (“CCs”) are integral to the securities ecosystem, as they serve as central counterparties for the trades executed on exchanges. Their primary role involves guaranteeing the settlement of trade by managing risks and providing finality to the settlements. Their nature as risk managers comes along...
Analyzing SEBI’s Informal Guidance on Related Parties in Corporate Groups
[Sikha Bansal and Avinash Shetty are with Vinod Kothari & Co] The regime surrounding related party transactions (‘RPT’) under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as significantly amended in 2021) (the ‘LODR Regulations’), is very wide and includes cross RPTs across the group. That is, transactions of a listed entity with related parties of its...
SEBI’s Move to Institutionalise Front Running in Mutual Funds
[Aryan Rawat is a 4th year B.A. LL.B. (Hons) student at National Law University, Odisha] On 5 August 2024, the Securities and Exchange Board of India (‘SEBI’) issued a circular to all asset management companies (‘AMCs’) and mutual funds (MFs), calling upon them to establish institutional mechanisms to curb front running and fraudulent securities transactions. This circular was issued at a time...
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