In the past, we have discussed issues with the onerous evidentiary burden carried by the Securities Exchange Board of India (SEBI) in relation to various securities offences such as insider trading. Following from past experience, SEBI has been conferred additional powers to seek further information in the course of investigation of such offences. Much of these additional powers came by way of...
Enhanced Disclosure of Mutual Fund Voting Policies
Generally, shareholders of a company may exercise their voting rights in any manner in which they deem fit. They are not even obliged to exercise their corporate franchise and may instead choose to abstain rom attending and voting at company meetings. This legal position may engender passivity and shareholder apathy, which have been prevalent in Indian companies for several decades. While law or...
Compensating Investor Losses in India
Posted on SSRN is a new working paper titled “The Protection of Minority Investors and the Compensation of Their Losses: A Case Study of India” that I have authored. The abstract is as follows: Any legal system may potentially deploy two separate but related models to ensure the accuracy of disclosure in the capital markets. First, it may possess legal institutions in the form of regulatory...
Guest Post: Insider Trading and “Price Sensitive Information”
[The following post is contributed by Yogesh Chande, who is a Consultant with Economic Laws Practice, Advocates & Solicitors. Views of the author are personal] In a recent order passed by the Adjudicating Officer of SEBI, an aggregate penalty of INR 2.50 million was imposed on five noticees consisting of Chairman, Vice-Chairman & Managing Director, Executive Directors and the Company...
Securities Laws (Amendment) Ordinance Re-promulgated
Last year, the Securities Laws (Amendment) Ordinance was promulgated (twice in sequence) to grant SEBI additional powers of enforcement on various matters and to expand its regime to regulate Ponzi schemes. After the second Ordinance lapsed, there was concern that the situation would result in disruption of SEBI’s enforcement process. After some dithering, the Securities Laws (Amendment)...
Consolidating Secondary Market Disclosures
(This post has been authored by, and is uploaded on behalf of, Professor Umakanth) As we have previously observed on this Blog, there is a considerable divergence between the requirements of disclosure in the primary markets and those in the secondary markets. While SEBI has progressively expanded the requirements of primary market disclosures through the SEBI (Issue of Capital and Disclosure...
SEBI Announces Corporate Governance Reforms
(The following post has been written by, and uploaded on behalf of, Professor Umakanth) Over a year ago, SEBI had issued a consultation paper that suggested several reforms to corporate governance norms in India that are contained in clause 49 of the listing agreement. The primary purpose of SEBI’s effort was to integrate the stipulations of clause 49 with the then prevailing clauses of the...
SEBI ICDR (Amendment) Regulations, 2014
[The following post is contributed by Shampita Das of Vinod Kothari & Co. She can be contacted at [email protected]] On 4 February 2014, SEBI issued a Notification amending the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (‘ICDR Regulations’) to make grading of an initial public offer (‘IPO’) by one or more credit rating agencies voluntary by companies. In...
Penalty for Late Disclosure of Shareholding
Last week, an adjudicating officer of SEBI issued an order imposing an aggregate penalty of Rs. 50 lakhs (Rs. 5 million) on certain promoter entities of Hindustan Unilever Limited (HUL) for delayed filing of disclosures regarding the shareholding of such entities under the SEBI takeover regulations. It came to SEBI’s notice that there were delayed filings of shareholding disclosures for certain...
Gold Purchase Schemes and CIS
In 2013, an Ordinance was promulgated to enhance SEBI’s powers to regulate investment pools. The Ordinance introduced section 11AA of the SEBI Act, which details the parameters of a collective investment scheme (CIS). It states that “pooling of funds under any scheme or arrangement” involving a corpus of Rs. 100 crores or more shall be deemed to be a CIS whether or not it is registered with SEBI...
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