An area that has left an ambiguous trail over the years has been the amount of public shareholding that is required in a company at the time that it embarks on a listing and thereafter on a continuous basis. Numbers for public shareholding limits have, in the past, ranged from 60% to 40% to 25% and finally to 10%. After a chequered history, the rules have finally resulted in its current position...
SEBI: Proposal on Integrated Disclosures
An aspect of the Indian securities regulations that has always been somewhat puzzling is the stark disparity in the disclosure regimes governing the primary markets and secondary markets. While a strong disclosure regime has been a boon to the primary markets where companies making a public offering are required to issue a prospectus with fairly onerous disclosure requirements accompanied by...
Stock Market Turmoil and the Role of Regulation
This is a cross-post from the Law and Other Things blog, to which also I contribute. Riding the downward tide of the global capital markets, Indian stock prices too tumbled 1,408 points on Monday, January 21, 2008 making investors poorer by $155 billion in a single day. The rout continued on Tuesday as well, before the markets partially recovered towards the end of the week. Reports indicate that...
Stoneridge: US Supreme Court Limits Scope of Securities Law Suits
BackgroundA significant decision in the area of securities laws was handed two days ago by the US Supreme Court in the case of Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc. In its judgment (available here), the court (by a 5:3 majority) held that private actions for securities fraud (under Section 10(b) of the Securities Exchange Act, 1934) are not allowed against third parties...
Simplifying Corporate Bond Issuances
Continuing with the spate of regulatory announcements by SEBI over the turn of the new year, it yesterday issued a press release proposing simplification of the primary issuance process for corporate bonds. It has released a consultative paper on the “Draft SEBI (Issue and Listing of Debt Securities) Regulations, 2008” for comment until January 23, 2008. The paper aims at simplification of the...
Insider Trading and Short Swing Profits
SEBI yesterday issued a Consultative Paper on introduction of ‘Short Swing Profit’ regulations in India. Under this proposal, any insider would be compelled to surrender profits to the company that are derived from a transaction involving the purchase and sale of securities by the insider within a period of six months. The consultative paper sets out the objective of the proposed regulation:...
REITs on the Anvil
Real estate investment trusts (REITs) are similar to mutual funds. However, unlike mutual funds that usually hold securities, the underlying assets held by REITs are constituted by real estate properties. Investors in REITs can participate in returns from these real estate investments. The last couple of years have seen a boom in the real estate sector, and several Indian real estate companies...
Promoters’ Contribution; SEBI Ruling in the Reliance Power Case
In its order passed yesterday, the Securities and Exchange Board of India (SEBI) ruled that shares acquired by the promoters of Reliance Power Limited (RPL) pursuant to a scheme of amalgamation approved by the High Court of Bombay would be eligible for computation of promoters’ contribution under the SEBI (Disclosure and Investor Protection) Guidelines. SEBI however imposed the condition that the...
Climate Change Disclosure
In an article titled “Making Impact Disclosure Mandatory” that appeared in the The Hindu Business Line on December 06, 2007, I have argued for imposing mandatory requirements on climate change disclosures by companies. Despite the wide range of risks and opportunities that climate change presents to the corporate sector, the level of disclosure to investors and deliberation of corporate policies...
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