TagSecurities Regulation

Compounding under Section 24A of SEBI Act: Charting A New Course

[Navya Saxena and Aadya Bansal are 4th-year B.A., LL.B. (Hons.) students at National Law Institute University, Bhopal] In Prakash Gupta v. Securities and Exchange Board of India (26 July 2021), the Supreme Court has addressed the question of whether the Securities and Exchange Board of India (“SEBI”) has veto power over compounding of offences under the Securities and Exchange Board of India Act...

Qualitative Tests for Accredited Investors: A Comparative Study

[Mehek Wadhwani and Rishi Raj are third-year students of B.A. LL.B. (Hons.) at MNLU Aurangabad] The Securities and Exchange Board of India (SEBI) recently ushered in the concept of a new class of investors in the Indian securities market, termed as accredited investors or qualified investors or professional investors. On 3 August 2021, the SEBI (Alternative Investment Funds) Regulations, 2012...

Compounding of Offences under the SEBI Act: Limiting the Role of SEBI

[Abhiraam Shukla is a III year student at the National Law Institute University, Bhopal] Section 24A of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) provides for the compounding/composition of certain offences which are punishable under the SEBI Act. It stipulates that any offence under the SEBI Act which is not punishable exclusively by imprisonment or by imprisonment and a...

Stalemate on the SAT in the PNB Housing Preferential Allotment Case

A two-member bench of the Securities Appellate Tribunal (SAT) yesterday returned a split verdict on the legal issues surrounding the preferential allotment of shares by PNB Housing Finance Limited. The facts are relatively straightforward. Since PNB Housing’s controlling shareholder, Punjab National Bank, was unable to infuse funds due to the lack of regulatory approval from the Reserve Bank of...

Mandatory Sunset Provisions in Shares with Superior Voting Rights

[Bhavya Solanki is a 4th year B.A., LL.B. (Hons.) student at the Maharashtra National Law University, Mumbai] Shares with differential voting rights [“DVR”], internationally known as dual class shares [“DCS”], are shares which have rights disproportionate to their economic ownership. DVRs include shares with superior voting rights [“SR Shares”] and shares with...

Fractional Ownership: Recommendations for Regulation

[Malavika Devaya is an Associate at Poovayya & Co., Bengaluru] Myre Capital, a fractional ownership platform by Morphogenesis, recently made headlines by raising INR 50 crores for its offering of the integrated township Magarpatta Cybercity. A concept that is fast gaining popularity in India but has been around in developed countries for a while now, fractional ownership is the obvious answer...

Disgorgement: An Equitable Remedy or a Penal Measure?

[Anoushka Biswas is a 3rd Year, B.A. LL.B. (Hons.) student at National University of Juridical Sciences, Kolkata] Disgorgement harbours the principle of giving up the possession of profits illegally obtained, leading to unjust enrichment. Black’s Law Dictionary defines disgorgement as “the act of giving up something (such as profits illegally obtained) on demand or by legal compulsion”. Unjust...

SEBI’s ‘Skin in the Game’ Directive – Investor Interest versus Employee Interest

[Aman Jha is a third-year student at National Law University, Delhi and Anurag Shah is a fourth-year student at School of Law, Christ University Bangalore] The Securities and Exchange Board of India (“SEBI”), through a circular dated April 28, 2021, has directed Asset Management Companies (“AMCs”) to compensate its key employees partly in the form of units of the mutual fund schemes managed by...

The Proposed Single Securities Markets Code

In the Budget 2021 speech, the Finance Minister announced a proposal “to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code.” When implemented, this would represent a significant step in the modernization of securities regulation in India. In my...

India’s Attempt to Regulate SPACs: Sponsors in the Spotlight

[Anushri Uttarwar is a 4th year law student at O.P. Jindal Global University] On March 11, 2021, the Securities and Exchange Board of India (“SEBI”) formed a group of experts to study the viability of introducing structures like special purpose acquisition companies (“SPACs”) in India. Contrary to SEBI’s guarded position, the International Financial Services Centre Authority (“IFSCA”) has already...

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