An “ad interim, ex parte” order passed by SEBI, directing companies in the Sahara Group not to raise funds by way of placement of their debentures, led to a debate here over interim reliefs granted by courts, after the Allahabad High Court stayed SEBI’s order. The Supreme Court has now refused to stay the stay granted by the Allahabad High Court. Sections 11 and 11B of the SEBI Act, 1992 confer...
Supreme Court on the Sahara Case
While the earlier post analyzing the judgment of the Allahabad High Court generated an interesting debate, it has been reported today (here, here and here) that the Supreme Court refused to interfere with the High Court’s order.
Public Offering of Securities: Liability of Investment Bank
In order to ensure accuracy of disclosures in offering documents pertaining to public issue of securities, regulators tend to impose liabilities for misstatements on issuers as well as intermediaries. The intermediaries, referred to as “gatekeepers” perform an important role in the securities markets. In his book, Gatekeepers: The Professions and Corporate Governance, Professor John Coffee notes...
Regulatory Steps Towards Public Offerings and Transparency
The Economic Times reports that SEBI has issued a circular which requires companies with less than 25% public float to raise funds through public offering of securities rather than through private placement to institutions, or QIPs. This is with a view to increasing the public holding in listed companies and to contain stock price manipulation. SEBI’s move comes close at the heels of its order on...
Allahabad High Court Stay in the SEBI-Sahara Case
(This post has been contributed by Amit Agrawal, a legal practitioner practicing before Rajasthan High Court, Jaipur and an alumnus of National Law School of India University, Bangalore) In the SEBI-Sahara controversy, SEBI has previously issued an ad-interim order on November 24, 2010 (discussed previously on this Blog) against Sahara entities and their promoters and directors. The securities...
Further Observations on SEBI’s Order in the Sahara Case
(The following post has been contributed by Vijay Kumar, a lawyer and a company secretary by qualification, who is practising as an Advocate in the Chennai High Court with the law firm of Iyer and Thomas) Further to the earlier post on this Blog, a few aspects that emerge from the order are as follows: (a) SEBI has come to the conclusion that OFCDs issued by SIRECL and SHICL are securities issued...
Offering of Debentures: SEBI’s Order in the Sahara Case
Earlier this week, SEBI issued an order restraining two entities of the Sahara group as well as certain promoters and directors from accessing the capital markets. While Sahara Prime City Limited had filed its draft red herring prospectus (DRHP) with SEBI in connection with its proposed IPO, SEBI received complaints that its group companies Sahara India Real Estate Corporation Limited (SIRECL)...
Disclosure as an Instrument of Securities Regulation
The almost universally accepted strategy for securities regulation is to require issuers to make adequate disclosures in offering documents. The role of the regulators is to determine the extent of disclosures required. It is then left to investors to rely upon the disclosures and to make a decision as to whether to invest or not. Sophisticated investors such as financial institutions rely on...
Changes to Capital Markets Regulations
On October 25, 2010, SEBI announced a number of changes to regulations governing capital markets. 1. Public offerings. A new regime is being established for IPOs by insurance companies. Rather than issue a new set of guidelines for that industry, SEBI has decided to apply the ICDR Regulations, 2009 along with additional industry-specific disclosures such as specific risk factors, overview of the...
Disclosures on Management Changes
The saga involving the removal of SKS Microfinance’s chief executive raises a number of issues relating to corporate governance as well as securities regulation. One such issue pertains to the nature of public disclosures made regarding the removal of the chief executive, which acquires prominence considering SKS is a public listed company. Circumstances that have panned out over the last few...
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