CAM Markets Team

The CAM Markets team can be reached at cam.mumbai@cyrilshroff.com

Securities Law Enforcement - Calibrating the Discipline of Penalty Imposition

Equipped with broad statutory powers, the Securities Exchange Board of India (SEBI) has been hard at work for the past 30 years, shouldering the herculean task of managing the Indian securities market, through both regulation and enforcement. Naturally, to help SEBI respond to and deal with evolving challenges, its powers, specifically those under the Securities Contracts (Regulation) Act, 1956 (SCRA) and the SEBI Act, 1992 (SEBI Act), have been continuously at play, allowing it to mete out a wide range of penalties, both monetary and substantive. SEBI’s exercise of such powers, in its capacity as a quasi-judicial authority, has increasingly become a subject-matter of appellate interest, on questions of both jurisdictional remit and proportionality of penal action.
Continue Reading Securities Law Enforcement: Calibrating the Discipline of Penalty Imposition

Superior Orders Defence - Corporate Fraud

The past few years have seen a marked increase in regulatory investigations and enforcement action into fraud. This increased scrutiny brings into focus the liability of the individuals involved in the fraud and the extent to which such individuals are liable.

Typically, when the company has committed fraud, persons who are responsible for the actions of the company – the ‘directing mind and will– are held liable. In contrast, where a fraud is committed on the company and/or its shareholders, it involves identifying both, the officers at whose behest, or for whose benefit, such actions were undertaken, as well as persons who executed the fraud. 
Continue Reading Corporate India, Individual Liability and the Relevance of the Superior Orders Defence

SEBI Circular DVR and Insider Trading Regulations

The Securities and Exchange Board of India (“SEBI”) at its board meeting on June 27, 2019 approved the following important proposals, which become effective on the formal amendment of the respective regulations. A brief summary of the significant changes are set out below:
Continue Reading SEBI Board Approves Framework for DVRs, New Definition of ‘Encumbrance’ and Clarifications to the Insider Trading Regulations

SEBI’s Latest Discussion Paper on Insider Trading Regulations

Prosecuting insider trading cases has always been a challenge for the Securities Exchange Board of India (SEBI). Primary evidence is difficult to come by, which impacts success rates as well as investigation timelines.

On June 10, 2019, SEBI released a discussion paper (Discussion Paper) proposing amendments to the SEBI (Prohibition of Insider Trading) Regulations, 2015 (Insider Trading Regulations) to establish systems and processes (both within listed companies, as well as, at SEBI) that incentivise individuals to report insider trading violations, if they come to their knowledge. In terms of the Discussion Paper, the informant may be rewarded up to INR 1 crore (approx. USD 150,000) if SEBI undertakes disgorgement of at least INR 5 crores (approx. USD 0.72 million) as a result of any action taken on the basis of true, credible and original information.
Continue Reading Bounty Hunting in Corporate India – Understanding SEBI’s Latest Discussion Paper on the Insider Trading Regulations

RBI’s Fintech Sandbox Proposal Startups

Technological innovation in the financial space, popularly known as ‘fintech’, has been at the forefront of regulatory thinking in recent times and is widely considered to be the panacea to the thorny issues of financial inclusion and ease of access to financial products/solutions, etc.

In 2018, the inter-regulatory Working Group (WG) set up by the Reserve Bank of India (RBI) to review the granular aspects of fintech and its implications, released a report being the ‘Report of the Working Group on FinTech and Digital banking’. One of the WG’s key recommendations was the introduction of an appropriate framework for the creation of a regulatory sandbox (RS) where the RBI could provide the requisite regulatory guidance to test products in a controlled environment.
Continue Reading Learning by Doing? The RBI’s Fintech Sandbox Proposal

NEW ICDR Regulations - SEBI

In November 2018, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (New ICDR Regulations) came into force, replacing the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (Old ICDR Regulations). The overhaul of the regulations followed a robust public consultative process, aimed at getting views from stakeholders and at bringing the Indian regulations closer to global best practices.

The New ICDR Regulations particularly emphasise streamlining disclosure requirements with respect to financial statements in offer documents for initial public offerings, by reducing the volume of disclosures and focusing on what is considered material and relevant to an investor in making an investment decision.Continue Reading Financial Disclosures Under the New ICDR Regulations – Half a Step Forward

Prohibition of Insider Trading Regulations 2015 in India , Amendments

The Securities and Exchange Board of India (SEBI) ended the year with a bang by issuing a number of notifications on December 31, including the SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018 (PIT Amendment Regulations). The PIT Amendment Regulations come into force on April 1, 2019 and will have significant impact on the manner in which listed companies and intermediaries navigate the market conduct framework.
Continue Reading A New Year Ushers in the Insider Trading Regulations, 2015 Version 2.0

Reserve bank of India - RBI vs Indian Government

At the heart of any modern democracy lies the doctrine of separation of powers, which ensures division of responsibilities and also structurally validates a key principle of governance, i.e., allowing each institution to function autonomously, while still maintaining accountability within the larger legislative framework. In codifying its own unique (and somewhat limited) interpretation of this doctrine, the Constitution of India delineates functions of the Union and the states, allowing Parliament to legislate on the functions of key agencies such as the Central Bureau of Investigation and the Reserve Bank of India (Entry 38, Seventh Schedule).
Continue Reading The Executive, The Central Bank and The Fault in their Stars

Recent Amendments to the Private Placement Guidelines

Section 42 of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 are substantive provisions for regulating private placements by Indian companies. These provisions are, of course, in addition to applicable regulations prescribed by the Securities and Exchange Board of India (“SEBI”) for listed companies. Recently, both Section 42 and Rule 14 have undergone amendments by way of the Companies (Amendment) Act, 2017 and the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2018, respectively (the “Recent Amendments”).
Continue Reading Recent Amendments to the Private Placement Guidelines – Revamp or Cosmetic?

Settling for a Price – The SEBI Consent Mechanism, Version 4.0

On August 10, 2018, the Securities and Exchange Board of India (SEBI) published a report (Report) of the High Level Committee under the Chairmanship of Justice A. R. Dave (Retd.) (Committee). The Report has made recommendations to revamp the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 (Regulations).

As and when amended, this will mark the fourth avatar of the consent process, first introduced by SEBI through a circular way back in 2007 (remodelled substantially in 2012) and then reincarnated as delegated legislation in 2014. The Report has taken into account SEBI’s experience with this mechanism in the past few years as well as evolving market trends.Continue Reading Settling for a Price – The SEBI Consent Mechanism, Version 4.0