[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...
SEBI Informal Guidance on Profit Sharing Arrangements
Last year, the Securities and Exchange Board of India (“SEBI”) clamped down on upside sharing arrangements between promoters or senior management of listed companies on the one hand and private equity investors on the other. Accordingly, the securities regulator amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “LODR Regulations”) to introduce regulation...
Corporate Insolvency Resolution Process and Implications on Securities Laws: Recent Changes
[Guest post by Yogesh Chande, Partner, Shardul Amarchand Mangaldas. View of the author are personal] SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”) The newly inserted provision in regulation 10 of the Takeover Regulations, notified on 14 August 2017, exempts an acquisition pursuant to a resolution plan approved under section 31 of...
SAT Rejects Appeals in the United Spirits Case
We had earlier this year discussed SEBI’s ad-interim ex parte order in the United Spirits Limited (USL) case by which several persons (including Mr. Vijay Mallya) were prohibited from buying, selling or otherwise dealing in any securities, with some of them being restrained from holding positions as directors or key managerial personnel of any listed company. Against this, some of the persons...
SAT Order on “Shell” Companies
The issue of “shell” companies has captured the attention of the regulators over the last couple of years. There is a pervading sense of regulatory fear that, left unchecked, shell companies may be utilized for various illegal purposes, including money laundering. The Government has been taking steps at various levels to deal with what it visualizes as a menace of shell companies. One instance...
Report on Regulation of Credit Rating Agencies in India
[Guest post by Shreya Prakash, who is a Research Fellow in the Corporate Law & Financial Regulation vertical at the Vidhi Centre for Legal Policy] Credit ratings are an opinion of a recognised entity on the relative creditworthiness of a debt instrument. Entities that form these opinions, i.e., credit rating agencies (‘CRAs’), are essential gatekeepers of the financial system. In fact...
SEBI Requires Disclosure of Loan Defaults
Over the last couple of years, there has been a steady regulatory move to create some connections between the banking system and the capital markets in order to address cases of loan defaults by companies, especially those listed on the stock exchanges. Take the case of wilful defaulters, who are effectively now kept out of the capital markets (as discussed here on this Blog). Another mechanism...
SAT Affirms SEBI’s Power to Lift the Corporate Veil
In an order passed yesterday in Sahara Asset Management Company P. Ltd v. Securities and Exchange Board of India, the Securities Appellate Tribunal (“SAT”) considered an appeal from an order of the Securities and Exchange Board of India (“SEBI”) in which SEBI had found that Sahara India Financial Corporation Ltd. (“Sahara Sponsor”) is not a “fit and proper” person and hence the Sahara Mutual Fund...
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