When the market prices of companies in India are lower than what they were a few months ago, they would obviously be attractive to private equity funds and similar investors. However, the SEBI minimum pricing norms as set out in Chapter XIII of the SEBI (Disclosure & Investor Protection) Guidelines, 2000 are hampering deals in these market conditions, as this report by INDIA PE suggests. The...
Preposterous policy view from SEBI on QIPs and Public Shareholding
The Securities and Exchange Board of India has issued an informal guidance relating to the Listing Agreement and the SEBI (Disclosure and Investor Protection) Guidelines (“DIP Guidelines“) that defies all logic and reason. Clause 13.A.1.1(b) of the DIP Guidelines, which governs private placements to qualified institutional buyers, provides that a listed company ought to be in...
Improving Stock Sales Practices of Intermediaries
Stock intermediaries around the world, such as brokers and sub-brokers, who recommend and sell securities to clients, are regulated by the securities regulatory agencies of the countries where they operate as well as the stock exchanges of which they are members. However, the stock intermediation industry has been facing several problems over the years on account of inappropriate business...
Price Manipulation in Stocks: Evidentiary Problems
SEBI last week passed an order in relation to an investigation involving the promoters of Zee Telefilms Limited. This was under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 1995 (the SEBI (PFUTP) Regulations). SEBI alleged that the promoters of Zee Telefilms Limited (now Zee Entertainment Enterprises Limited) provided funds to the...
Pay Commission Recommendation for Regulatory Bodies Laudable
The Sixth Pay Commission Report has hogged headlines. An interesting and important recommendation that will help the administration of corporate law is the recommendation on payscales for full-time members of regulatory bodies set up under Acts of the Parliament of India. The Commission has recommended that Chairmen of bodies such as the Securities and Exchange Board of India, the Central...
Special Purpose Acquisition Companies: On the Rise
Special Purpose Acquisition Companies (SPACs) that are also known as “blank check companies” are gradually acquiring prominence in the Indian markets. It is worth briefly examining these entities and their advantages as well as the risks surrounding them. SPACs are essentially shell entities with no business operations, and which raise funds from the public through an initial public offering...
Immediate agenda for reform before SEBI
When a new chairman takes charge at the Securities and Exchange Board of India (“SEBI”) the media tends to be full of what the new chairman ought to be doing. Here are some action items that SEBI ought to address as a matter of priority:- a) The SEBI (Foreign Institutional Investors) Regulations, 1996 (“FII Regulations”), which govern foreign institutional investors (“FIIs”) await a comprehensive...
SEBI Rationalises Filing Fee Structure
The following post is contributed by Somasekhar Sundaresan The first board meeting under the new Chairman of the Securities and Exchange Board of India (“SEBI”) has taken a very significant decision. SEBI has slashed the ad valorem fee rates attendant with filing of various draft offer documents, by nearly 80%, and has capped the total fees. Eyebrows were raised when SEBI introduced the ad...
SEBI Reigns in Art Funds
Art funds have become a popular alternative investment avenue in India (see news reports in Moneycontrol India and Rediff Money). In a communication titled Message for Investors, SEBI has announced that art funds are collective schemes and will therefore fall within the purview of SEBI regulations. Here is the relevant extract: “This message is issued by SEBI in the interest of investors with...
Tax Benefits for REITs Likely
An earlier post on this blog had stated that the success of REITs in India would depend upon the availability of tax benefits to the REIT vehicle in the form of a tax pass-through. The Economic Times reports that SEBI has made out a case to the Government seeking that REITs be taxed in the same manner as mutual funds. The news report states: “The income-tax law now provides for a pass-through...
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