Over the last decade, there has been a continuous tightening of securities regulation and corporate governance norms in the US following the various corporate governance scandals (Enron, WorldCom, etc.) and the global financial crisis. This has appeared in the form of legislation such as the Sarbanes-Oxley Act and the Dodd-Frank Act. More recently, however, there has been a relaxation on some...
Regulating Alternative Investment Funds
At its board meeting on April 2, 2012, SEBI has approved a proposal to frame a separate set of regulations governing alternative investment funds. This is with a view to regulate the fund industry more comprehensively. Currently, there are not only various routes available for investment funds to be structured, but there is ambiguity regarding the regulation of certain types of investment funds...
Institutional Placement Program
(The following post is contributed by Yogesh Chande, an advocate practising in Mumbai) The Institutional Placement Program (IPP) was approved by Securities and Exchange Board of India (SEBI) at its board meeting held on 3 January 2012. Subsequently, by a gazette notification dated 30 January 2012, the provision relating to IPP (Chapter VIII-A) was inserted in the SEBI (Issue...
SEBI Regulates Algorithmic Trading
In order to keep up with advances in technology involving securities trading, SEBI has issued to the stock exchanges broad guidelines on algorithmic trading in the securities markets. The concept of algorithmic trading is defined as any “order that is generated using automated execution logic”. Such trading is effected by automated electronic platforms that analyze split-second information and...
Bombay HC in the MCX Case: Partial Reprieve to “Options” in Securities
Apart from dealing with specific issues relating to the facts of MCX’s application to commence the business of a stock exchange, the Bombay High Court’s judgment introduces greater clarity regarding the enforceability of options in securities of Indian public unlisted companies. The court was concerned with two issues pertaining to buyback and option arrangements that were entered into between...
Bombay HC in the MCX Case: Summary of the Judgment
The following is a summary of the various issues decided by the court, as extracted from the conclusions in the judgment itself: (i) Though the MIMPS Regulations in terms apply to a stock exchange in respect of which a Scheme for demutualisation and corporatisation has been approved under Section 4B, the application of those regulations was extended to the Petitioner by SEBI as a condition for...
Bombay HC Ruling on the MCX-SEBI Case
The Bombay High Court has pronounced its judgment today in the matter relating to the denial of a stock exchange licence to the MCX Exchange. The Court has set aside SEBI’s order of 23 September 2010 (which was discussed here) and directed SEBI to reconsider MCX’s application afresh in the light of the Court’s observations. The judgment has significant implications on various...
Offer for sale by promoters through stock exchange mechanism (OFS) – A welcome move
(The following post is contributed by Yogesh Chande, an advocate practising in Mumbai) Background The Securities and Exchange Board of India (SEBI) by a circular dated 1 February 2012[1] (Circular), has permitted the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (Stock Exchanges) to provide a separate window, i.e. apart from the existing trading system for the...
SEBI Order on Synchronised Trades
Last week, SEBI issued an order involving synchronised trading in the scrips of Adani Exports Ltd. The case involves a sharp spike in the price of the shares, more than doubling during a one-month period in November-December 2003. SEBI’s investigation revealed possible synchronised reversal of trades by certain individuals and entities that may have contributed to the price movement. While...
SAT on Disclosures Regarding “Promoters”
The Securities Appellate Tribunal (SAT) has issued its decision overturning an order of SEBI’s adjudicating officer that had found Enam Securities to have violated securities laws in connection with the IPO of Yes Bank. One of the key issues in contention was whether Rabobank ought to have been disclosed as a “promoter” of Yes Bank. On facts, while the application to the Reserve Bank of India...
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