An attractive option for Indian companies raising finances is to issue rupee-denominated bonds to persons residing outside India. Popularly known as “masala bonds”, some of these may even be listed on foreign stock exchanges. Naturally, the legal regime governing these bonds, particularly from the purview of corporate law, securities regulation and foreign exchange laws is of relevance. Over a...
Discretionary Portfolio Management and Insider Trading
The concept of discretionary portfolio management (“DPM”) is one whereby a portfolio manager makes investments on behalf of a client. The decisions regarding which investments must be made, and on what terms, are left to the portfolio manager. The client neither influences the decision-making of the portfolio manager nor does the client get involved in day-to-day investment decisions. Request and...
SEBI’s Discussion Paper on Algorithmic Trading
Background to Algorithmic Trading Similar to most other fields, the use of technology is being optimized in trading in the stock markets. Stock trading is getting increasingly automated through use of sophisticated computer systems that operate through algorithms, which minimize human involvement and decision-making. Not only does this lead to the extensive use of technology by stock traders and...
Supreme Court on Applicability of the Regime on Collective Investment Schemes
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...
Bonus Debentures: A New Perspective on Certain Issues and Concerns
[The following post is contributed by Priya Garg, who is a student at the West Bengal National University of Juridical Sciences (WB-NUJS). An earlier post on this Blog discussing the features and implications of bonus debentures is available here.] Bonus debentures are those debentures which a company issues to its shareholders by using its reserves’ balance. Their issue does not require cash...
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...
2nd GNLU Moot on Securities and Investment Law 2016
[The following announcement is posted on behalf of the Organising Committee of the GNLUMSIL] [Sep 09-11]: Register by July 20 (Revised schedule) ABOUT After successfully hosting the inaugural edition of the GNLU Moot on Securities and Investment Law (GNLUMSIL) in 2015, we would like to invite participation for the 2nd edition of GNLUMSIL, 2016. The moot is scheduled to be held from 9 – 11...
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...
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