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...
Supreme Court’s Stand on Market Impact for Synchronised Trades
[Jitesh Maheshwari is an associate at Mindspright Legal and Rakshita Poddar is a lawyer based in Mumbai] Introduction The Supreme Court of India in its recent landmark judgement of SEBI v. Rakhi Trading Pvt. Ltd., delivered by Justice Kurian and Justice Banumathi, has overruled several orders of the Securities Appellate Tribunal which had held that synchronised trades are illegal only when they...
Why SEBI is Failing at Regulating Insider Trading in India
[Bhavya Bhandari is currently pursuing an LLM. in Corporation Law at NYU School of Law. She can be reached at [email protected]. The Indian securities market regulator has been criticized in the last two decades for its failure to investigate and prosecute perpetrators of insider trading. Even when the perpetrators are caught and punished, the penalty is often so low that the regulations have lost...
Crossholding in Credit Rating Agencies: An Insight into the SEBI Consultation Paper
[Kashish Jain is a 4th year B.B.A L.L.B (Hons.) student at Jindal Global Law School in Sonipat, Haryana] A credit rating agency (CRA) is a service provider that assesses the creditworthiness of an entity (issuer) or a debt instrument (e.g., asset-backed securities). Typically, it expresses an opinion that is based on processing information and conducting research. CRAs seek to reduce the...
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