A couple of years ago, we had discussed the order of SEBI’s adjudicating officer imposing a penalty of Rs. 5 lakhs (Rs. 0.5 million) on the compliance officer of Satyam Computer Services Limited. We had noted that this imposed a somewhat unduly onerous obligation on compliance officers and wondered “whether a different outcome would ensue if the compliance officer in Satyam’s case were to go on...
SEBI Proposal for Infrastructure Investment Trusts
Recognizing the deficit in financing infrastructure development in India, SEBI has floated a proposal for a separate investment vehicle for infrastructure investments. Last week, it issued a Consultation Paper on Infrastructure Investment Trusts, on which comments are invited from the public by January 20, 2014. SEBI’s rationale is to ensure that the lack of an effective investment framework does...
Overhauling the Insider Trading Regulations: Part 3
[This is a continuation of two previous posts (here and here) in this series] Trading Plan The Committee has recommended the concept of a trading plan, which is novel in the Indian context but prevalent in some other jurisdictions. This concept has been recommended almost on an experimental basis, to be reconsidered by SEBI based on the initial experience. Such a trading plan has been found to be...
Overhauling the Insider Trading Regulations: Part 2
[This is a continuation of a previous post in this series] Operative Provisions The operative provisions (or charging provisions, as they are referred to by the Committee) go to the heart of the prohibition on insider trading, which also constitutes an offence for the breach thereof. The scope of insider trading usually tends to capture two somewhat distinct but related aspects: 1. The...
Overhauling the Insider Trading Regulations: Part 1
Background The legal regime governing insider trading in India is at least two decades old. The SEBI (Prohibition of Insider Trading) Regulations, 1992 were one of the initial few regulations that were prescribed by SEBI upon its establishment. However, the experience regarding the implementation of the legal regime on insider trading has been fraught with considerable difficulties. Although...
The Legalities of Bitcoin
The phenomenon of Bitcoin has taken the financial world by storm. A form of currency, although it came into existence only in 2009, it has increased exponentially both in usage and value. It has been said that the value of Bitcoin has appreciated by a whopping 5,000% in less than a year. This form of currency has gained momentum in India as well, as this report in the Mint suggests. US Court...
SEBI’s Proposal to Regulate Research Analysts
In a disclosure-based regime for securities regulation, research analysts have a significant role to play. When issuers and intermediaries are required to make extensive disclosures as mandated by law, it gives rise to the risk of “information overload”. The recipients of the information are unable to meaningfully decipher the impact of such information, particularly where the emphasis is on...
Review of Stock-Related Employee Benefit Schemes
The legal regime pertaining to the grant of employee stock options (ESOPs) and employee share purchases (ESPSs) has been undergoing some change in recent years, particularly for those that are implemented through a trust established by a company for this purpose. In August 2012, SEBI announced its decision requiring all listed companies to frame employee benefit schemes only in accordance with...
Monitoring Secondary Market Disclosures
One of the concerns regarding the corporate disclosure regime is that while the primary market disclosure requirements (e.g. for a prospectus) are extensive and stringent, the secondary market disclosures by companies that are already listed on the stock exchanges are far from being elaborate. In order to bridge this gap, SEBI has been taking steps to enhance the disclosure requirements in the...
The Resurgence of REITs
More than 5 years ago (in December 2007), SEBI had issued a consultation paper and draft regulations with a view to paving the way for the introduction of real estate investment trusts (REITs) in the Indian markets (which we had the opportunity to discuss here). However, the plan seemed to have gathered moss for a number of years. Earlier this month, it was revived when SEBI issued another...
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