TagSecurities Regulation

SEBI Clarifies Scope of Embargo Against Share Issuances Following Delisting

Companies that are undertaking a delisting of equity shares must be prepared to endure an embargo that would prevent them from listing their shares for a further period of time (five or ten years, depending upon the circumstances). Such a restriction is contained in regulation 30(1) of the SEBI (Delisting of Equity Shares) Regulations, 2009. This is to prevent companies from retreating the...

Does Section 11B of the SEBI Act Envisage ‘Non-Compliance’ of Directions? – Part I

[Rahul Sibal is a 4th Year student and Deep Shah a 3rd Year student of NALSAR Hyderabad] Background In March this year, the Securities and Exchange Board of India (‘SEBI’) confirmed an interesting interim order that was passed last year. The interim order (the ‘Order’) impounded profits that Beejay Investments derived from trading in securities, with such profits being termed as ‘unlawful gains’...

Anti-Dilution and Rights Issue: On the Right Side of the Law?

[Job Michael Mathew is a 4th year BA.LL.B (Hons) student at NALSAR University of Law. He may be reached at job.mathew94@gmail.com] This post examines whether the instrument of rights issue can be used by unlisted companies in enforcing anti-dilution provisions which may be one of terms in a shareholders’ agreement with a foreign...

Categorization of Pledge Under SEBI’s Insider Trading Regulations, 1992: Arguments against the Tide

[Parth Dixit is a 4th Year, BA/LLB (Hons.) student at Symbiosis Law School, Pune.] By way of its order dated August 11, 2017 in the case of SRSR Holdings Private Limited v. Securities and Exchange Board of India, the Securities Appellate Tribunal (SAT) has provided a degree of finality to an important question raised in the aftermath of the infamous Satyam scam of 2009-2010. The question was...

SEBI: Rules on Profit Sharing Arrangements Apply to Unlisted Subsidiaries

The rules introduced earlier this year by the Securities and Exchange Board of India (“SEBI”) that impose restrictions on profit sharing arrangements in respect of listed companies have already provoked interpretational controversies. In an earlier informal guidance (relating to Accelya Kale Solutions Limited), SEBI clarified profit sharing arrangements that involved employees being provided...

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...

The Supreme Court’s Liberal Interpretation of the SEBI Regulations on Fraudulent Trade Practices

[Jitesh Maheshwari is an Associate at Mindspright Legal in Mumbai] Introduction The Supreme Court last month passed a landmark judgment in SEBI v. Shri Kanaiyalal Baldevbhai Patel in which front running by a non-intermediary has been bought within  the prohibition of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (the “PFUTP...

Regulation of Equity Based Crowdfunding in India

[Priyanka Sunjay is a Fourth year student, B.A., LL.B.(Hons), National Law University, Jodhpur] Crowdfunding is a means by which an entrepreneur or business raises financing by way of small contributions from a large number of individuals using mass communication through the Internet. It is usually used to raise funds for films, art, business ventures or social causes.  There are various types of...

Private Equity Investors as Promoters in an Initial Public Offer

[Guest post by Rashmi Ramanath, who is a 5th year B.A., LL.B. (Hons.) student at Jindal Global Law School in Sonipat] The Initial Public Offering (IPO) of SKS Microfinance was a first of its kind. It was for the first time that a group of four venture capitalists led by Sequoia Capital India were named as promoters to an issue. Vikram Akula, one of the company’s founders, owned a 6% stake in the...

SEBI’s Policy on Self-Trades

[Guest post by Jitesh Maheshwari, Associate at Mindspright Legal in Mumbai] Introduction Self-trades are trades executed on the stock market in which the same entity is both buyer and seller. These trades do not represent a real change in beneficial ownership of the security. Earlier, the position on self-trades was that they create artificial or fictitious volume in the market, and give a false...

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