The Supreme Court of India earlier this month ruled on the applicability of the regulatory regime relating to collective investment schemes (“CIS”). In Securities and Exchange Board of India v. Gaurav Varshney, the legal question was rather straightforward. On 25 January 1995, section 12(1B) was inserted into the Securities and Exchange Board of India Act, 1992 (the “SEBI Act”). It provided that...
Paper on Crowdfunding
Arjya Majumdar and I have a paper titled “Regulating Equity Crowdfunding in India: Walking a Tightrope” that is available on SSRN. The abstract is as follows: Start-up companies face difficulties in raising finances, and the situation has exacerbated since the global financial crisis in 2008. As a result, crowdfunding has made its appearance as an attractive alternative capital-raising mechanism...
The Quest for Liquidity – Recent Measures to Curb Discretionary Restrictions on Redemptions of Mutual Fund Units
[The following guest post is contributed by Arka Saha, who is a 4th Year B.A.LL.B. (Hons) & Executive Student in CS (ICSI) at National Law University Odisha (NLU-O)] One of the key objectives of mutual fund investments, along with returns and security, is liquidity – the ability to liquidate holdings and withdraw investments in units as per the needs of the holder. Even closed-ended...
Recent Measures to Curb ODI Abuse – Do They Represent an Equilibrium Point?
[The following guest post is contributed by Arka Saha, who is a 4th Year B.A.LL.B. (Hons) & Executive Student in CS (ICSI) at National Law University Odisha (NLU-O)] Offshore Derivative Instruments (ODIs) such as Participatory Notes (P-Notes) and equity linked notes constitute a significant chunk of total investments by Foreign Portfolio Investors in India, thus posing an imminent threat...
SEBI’s Regime on Wilful Defaulters
Earlier this year, the Securities and Exchange Board of India (SEBI) had issued a discussion paper that proposed tight curbs against wilful defaulters from accessing the capital markets. We had commented on the discussion paper in previous posts (here and here). Pursuant to the consultation process, SEBI last week issued amendments to various regulations in order to operationalize such curbs...
The Need for a Dividend Disclosure Policy
[The following guest post is contributed by Soham Roy & Akhil Nene, who are 5th year students at the National Law University Odisha] In a recent Board meeting, SEBI provided an in-principle nod to mandating the top 500 listed companies in India (according to market capitalization) to disclose a dividend disclosure policy. Such a policy may include circumstances under which their shareholders...
SEBI’s Inconsistent Orders on Similar Securities Law Violations
[The following guest post is contributed by Supreme Waskar, who is a corporate lawyer] By way of its order dated April 20, 2016 in the matter of M/s. Krishna Enterprises & M/s. Rajesh Services Centre (“Appellants”), the Securities Appellate Tribunal (SAT) observed that the Securities and Exchange Board of India (SEBI) is inconsistent in levying penalties for similar violations. The...
Delaware Court on the Question of “Control”
We have been debating on this Blog (here, here and here) the concept of “control” in a company in the light of the Securities and Exchange Board of India’s (SEBI’s) consultation process that is currently underway. In this context, it would be useful to consider developments from elsewhere that may be instructive. This post considers a recent decision of the Delaware Chancery Court that called...
SEBI’s Interim Order in the Sharepro Case
Last week, SEBI issued an ex-parte ad-interim order in a case involving Sharepro Services (I) Private Limited, which is a registrar and transfer agent (RTA) for a number of companies. Based on certain complaints, SEBI began investigating into the affairs of Sharepro and found a number of irregularities. For example, dividends which were to be transferred into the Investor Education and Protection...
Equity-Based Crowdfunding as an Early-Stage Financing Alternative: Critique of the Regulatory Proposals in India
[The following guest post is contributed by Shwetha Chandrashekar, who is a Senior Associate in Bangalore, India at GameChanger Law Advisors. She can be contacted on [email protected].] With over 4200 start-ups, India is the fastest growing start-up ecosystem worldwide. It has the third-largest number of start-ups in the technology sector following the US and the UK.[1] However, India is...
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