Currently, the issue of shares with differential rights as to voting and dividend is in a state of flux. While the Companies Act, 1956 and the Rules issued pursuant to that allow shares with differential rights, SEBI has proscribed the issue of shares with “superior voting rights” in listed companies, implicitly allowing shares with “inferior” voting rights. Finally, however, the Companies Bill...
The SEBI-NSDL Controversy
The recent decision of the SEBI to set aside as ultra vires two orders passed by a Special Committee set up by it has led to a huge furore in commercial and legal circles. The origin of the controversy was the appointment of CB Bhave as the Chairperson of the SEBI at a time when SEBI was investigating the propriety of the actions of the National Securities Depositary Limited (“NSDL”), in relation...
A Round-up on Recent SEBI Reforms
Earlier this week, SEBI announced a slew of capital market reforms. This comes in the wake of recovery in the markets as well as the Government’s intention to undertake disinvestments in public sector undertakings (PSU). The principal reforms and their impact are discussed below. Small and Medium Enterprises (SMEs)SEBI has established a separate regime for listings by SMEs. Companies listing on...
Powers of SEBI and SEC Compared
In his column in the Business Standard this week, our guest contributor Somasekhar Sundaresan argues that, if one were to go by the rule book, SEBI has greater powers than the SEC. He lists out several significant powers of SEBI that can be exercised without intervention of the court. Here are some excerpts: Take the Raj Rajaratnam case itself. The SEC has had to file a complaint before a court...
SAT on indirect acquisitions – correct in letter and spirit
Earlier this month, the Securities Appellate Tribunal (“SAT”) opined on the computation of the minimum offer price for an indirect takeover of a listed company. An interesting critique of this opinion was published on this blog the next day. The SAT had disposed of two appeals (Appeals No. 137 and 139 of 2009) by a common order. I respectfully disagree with the critique on the blog. In my view...
The Legal Aspects of Dual Listings
There has recently been a fair amount of discussion regarding the ability of companies to carry out dual listings in India. This arises in the context of dual listing as a possible structure being considered in the Bharti-MTN transaction. Generally, dual listings occur when two or more companies (that otherwise intend to merge) continue as separate entities with separate sets of shareholders, but...
Revised Primary Capital Market Norms
In the 17 years that SEBI has been in existence, the rules pertaining to issue and sale of capital to the public have undergone sea-change. This is not surprising as the nature and size of the Indian primary markets have witnessed significant growth in these years. The primary market norms (post the creation of SEBI) were contained in the SEBI Disclosure and Investor Protection Guidelines issued...
Amendments to DIP Guidelines: Rights Issues and IDRs
SEBI today issued amendments to the SEBI (Disclosure and Investor Protection) Guidelines, 2000 with a view to simplifying the process for a rights issue. Since listed companies embarking on a rights issue are already subject to the disclosure norms under the listing agreement, substantial information regarding such companies are already available in the public domain, and hence SEBI has decided...
Merits of a Financial Services Appellate Tribunal
(The following column by Somasekhar Sundaresan appeared in today’s Business Standard) Newspapers have recently reported that a proposal has been mooted in government to convert the Securities Appellate Tribunal (SAT) into a “Financial Services Appellate Tribunal” to hear grievances against orders passed by various sub-sectoral regulators. Currently, the SAT hears appeals only against orders...
Shareholders and Their Duties under Indian Law
Under the Companies Act, 1956, shareholding in an Indian company is almost entirely associated with concepts like rights, entitlements and ownership. This emanates from Section 82, which reads as follows: The shares or debentures or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles of the company. Shareholding is generally not...
Recent Comments