[Tanaya Desai is a 5th-year student at ILS Law College, Pune] Introduction In its press release dated June 12, 2018, the Securities Exchange Board of India (“SEBI”) expressed its intention to consider facilitating unlisted companies incorporated in India to directly list their equity share capital on foreign exchanges and, concurrently, of foreign firms on Indian exchanges. In furtherance of the...
Analysing the Change in Law Regarding Issuance of Sweat Equity Shares
[Vartika Tiwari is a 3rdYear student of National Law Institute University, Bhopal and is on the Editorial Board of NLIU Law Review] On 16 January 2016, the Government launched the “Startup India”campaign and ever since it has been making constant efforts to promote startups and make the country business friendly. There is no denying the fact that India has come a long way since then. In fact, it...
SEBI Informal Guidance on Foreign Portfolio Investments in Unlisted Non-Convertible Debentures
[Kosha Thaker is a corporate lawyer with a law firm in Mumbai] Background Earlier, registered foreign portfolio investors (“FPIs”) were permitted to invest only in listed non-convertible debentures (“NCDs”) or to-be listed non-convertible debentures (i.e. if the NCDs were listed within a period of 15 days from such investment). There was, however, a special carve out for FPIs investing in...
SEBI Order in the USL Case: Lessons on Tunneling
In countries that are replete with corporate group structures (as in India), it is common to find transactions between a company on the one hand and a counterparty that has some relationship with it on the other. Referred to as a related party transaction (RPT), this could generate benefits if carried out on an arm’s length basis. At the same time, RPTs can be used to divert wealth from listed...
SEBI Informal Guidance: Investment Banking for State-Owned Enterprises
In order to avoid potential conflicts of interest, the various regulations issued by the Securities and Exchange Board of India (“SEBI”) provide that merchant banks cannot act in transactions involving their “associates”. This is so in public offerings, takeovers, buybacks, delisting offers and similar transactions that mandate the requirement for a SEBI-registered merchant banker. In case the...
Disclosure Requirements Under the Insolvency and Bankruptcy Code: SEBI’s Proposed Amendments
[Mallika Sen is a 2nd year B.A. LL.B. (Hons.) student at the National Law School of India University, Bangalore and Rudresh Mandal is a 3rd year B.A. LL.B. (Hons.) student at the NALSAR University of Law, Hyderabad. Introduction On March 28, 2018, the Securities and Exchange Board of India (‘SEBI’) released a discussion paper on compliance with SEBI regulations by listed entities undergoing the...
SEBI Mandates Dematerialisation of Securities
[Nikita Snehil is a Manager at Vinod Kothari & Co, and can be reached at [email protected]] In its meeting held on March 28, 2018, the Securities and Exchange Board of India (‘SEBI’) has decided to amend regulation 40 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’), which deals with transfer or transmission or transposition of...
SEBI Regulation on Phantom Stock Options
[Dhruv Somayajula is a BA, LLB (Hons) student at NALSAR University of Law, Hyderabad] Introduction To minimize attrition of employees that are indispensable to its operation, companies offer financial incentives such as stock options. Stock appreciation rights (‘SARs’) are one such kind of stock options that create a right to the increment in value of the corporation’s stock over a...
WhatsApp Leak Case: Powers of SEBI vs Privacy of Individuals
[Nandini Garg is a 4th year B.A., LL.B. (Hons.) student at National Law Institute University in Bhopal] In November, 2017, Reuters reported that the second quarter earnings of 12 companies, including popular blue chips such as Dr. Reddy’s, Cipla, Tata Steel etc., were being circulated on private WhatsApp groups. This prompted the Securities and Exchange Board of India (“SEBI”) to...
Qualified Institutional Placements: SEBI Settles the Dust
[Shubham Sancheti is a 4th Year B.A., LL.B. (Hons.) student at NALSAR University of Law, Hyderabad] The Securities and Exchange Board of India [“SEBI”] omitted clause (c) under Regulation 82 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 [“Regulations”] by way of a recent amendment [“Amendment”]. The provision falls in Chapter VIII of the Regulations which deals with...
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