Yesterday, the Alternative Investment Policy Advisory Committee appointed by SEBI under the chairmanship of Mr. Narayana Murtyh issued its first report. The Committee has suggested a number of reforms on different fronts, including creating a favourable tax environment for investors, unlocking domestic sources of venture capital and private equity, enabling and encouraging onshore fund management...
India Plans to Tap into Green Bonds
[The following guest post is contributed by Arundhuthi Bose, who is an Executive at Vinod Kothari & Co.] Introduction Issuing bonds to raise funds from investors is not a novel concept. A bond, in common parlance, is an instrument evidencing indebtedness of the bond issuer to the bondholders. Here, a debt instrument is issued by the issuer to the investor, under which the issuer...
Presumption in Insider Trading
Given the evidentiary problems in insider trading cases, SEBI has resorted to the use of presumptions in its enforcement of the SEBI (Prohibition of Insider Trading) Regulations, 1992. Some of the issues that arose due to this approach have been discussed in the past. These issues have resurfaced more recently in a short order of the Securities Appellate Tribunal (SAT) in the case of Reliance...
Whether Collection of Margin on Derivative Trades is Mandatory?
[This post is contributed by Prachi Pandya, founding proprietress of Corporate Attorneys and Vanessa Fernandes, an intern at Corporate Attorneys] Despite being termed as a weapon of mass destruction by Warren Buffet, derivatives are still an integral part of stock market trading. Whilst purchasing equity, one has to pay the entire value of the shares purchased within the settlement period of two...
SEBI Adjudication Order: Disclosure of Encumbrances Over Shares
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “SAST Regulations”) contains provisions in Reg. 31 that requires promoters of a company to disclose to the company and the stock exchanges the details of shares encumbered by them and also any invocation or release of encumbrance. The genesis of the requirement to disclose pledge and other encumbrances arose after...
A Rule of Reason for Self-Trades?
[The following guest post is contributed by Nikunj Agarwal, a 4th year student at RML National Law University, Lucknow and Arjun Agarwal, a 3rd year student at WB National University of Juridical Sciences, Kolkata. The authors can be contacted at [email protected]] Prefatory It is one of the well-known principles of securities regulation that the primary objective of such regulation is to...
Enhanced Disclosure Requirements for Listed Companies
SEBI this week issued a series of circulars pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), which seek to streamline and enhance the disclosure obligations of listed companies. The three different circulars are briefly discussed below. Shareholder Voting Results In the case of shareholders’ meetings, SEBI has prescribed that a...
Investment Funds and the Concept of “Side-Pocket”
[The following guest post is contributed by Pavit Singh Kochar, an advocate practicing in New Delhi] A popular concept abroad that is yet to be practised extensively in India is a “Side-Pocket”, which means the segregation of the portfolio or funds to separate the illiquid investments from the more liquid assets in the portfolio. This concept is used when a part of the portfolio is not performing...
The Growth of Unsponsored American Depository Receipts of Indian Companies
[The following guest post is contributed by Dhanush. M, a 5th year student at the Jindal Global Law School] On October 10, 2008, amendments to section 12g3-2(b) of the Securities Exchange Act of 1934 became effective. The amendment allowed a foreign private issuer to have its equity securities traded in the U.S. over-the-counter market without registration under Section 12(g) of the...
SEBI Denied Locus Over Scheme of Arrangement
It is a well-known fact that schemes of arrangement are a popular method to implement mergers and corporate restructuring transactions in India. While they involves an elaborate and cumbersome procedure and the oversight of the court, parties enjoy tremendous flexibility in structuring their transactions. More importantly, such a scheme is binding on the dissenting minority. When this involves...
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