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Yash J. Ashar

Senior Partner at Cyril Amarchand Mangaldas. An experienced practitioner in Indian securities law, Yash has been associated with a number of capital markets transactions including initial public offerings, follow-on offerings, QIPs, rights offerings, ADRs, GDRs and FCCBs.  He can be reached at yash.ashar@cyrilshroff.com‎

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Infrastructure Investment Trusts – Simplifying the Structure

The infrastructure sector is a key driver for any economy. Among the many avenues of financing large-scale investments in infrastructure, including mergers and acquisitions, private equity investments and capital raising, setting-up and establishing infrastructure investment trusts (“InvITs”) has begun to gain traction with developers of infrastructure projects, including by public sector undertakings, to enable them to monetise their assets and undertake further infrastructure development. In the last few months, an increasing interest has also been evinced by large private equity firms, development institutions and multilateral and bilateral financial institutions in not only investing in the units of InvITs, but also in setting-up InvITs either on their own or jointly with Indian developers due to the yields offered by InvITs and the favourable and welcome changes to the tax regime applicable to InvITs, including unlisted InvITs.
Continue Reading Infrastructure Investment Trusts – Simplifying the Structure

Buy-Backs by Listed Companies - Key Considerations

A listed company proposing to undertake a buy-back is required to primarily comply with the provisions of the Companies Act, 2013 (the “Companies Act”) and the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 (the “SEBI Regulations”). However, a listed company is also required to ensure compliance with the requirements of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “SEBI Takeover Regulations”), the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Foreign Exchange Management Act, 1999, the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and other applicable securities laws including in other jurisdictions.

As explained in our earlier blog, as prescribed in the SEBI Regulations, a listed company may undertake a buy-back of its shares and other specified securities through any of the following methods: (a) from the existing holders of securities on a proportionate basis through a tender offer; (b) from the open market either through the book building process or through the stock exchange mechanism; or (c) from odd-lot holders.
Continue Reading Buy-Backs by Listed Companies: Key Considerations

Tax implications on INVITs, REITs and its Unitholders under Finance Act 2020

As you are aware, the Finance Minister, Ms. Nirmala Sitharaman, presented the Union Budget 2020-2021 on February 1, 2020 and consequently, introduced the Finance Bill, 2020 (“Bill”) in the Lok Sabha. The Bill comprised the financial proposals, including taxation related proposals, to amend the provisions of the Income-tax Act, 1961 (“Income-tax Act”) for the financial year 2021. Subsequently, the Finance Minister and her team had several discussions with various stakeholders, who we understand made many representations, seeking changes in some of the proposals. Pursuant to this, amendments to the Bill were presented and the Bill, incorporating the amendments was passed by the parliament on March 26, 2020 and received the assent of the President of India on March 27, 2020. It has now been enacted as the Finance Act, 2020 (“Finance Act”).
Continue Reading UPDATE:  Tax implications on INVITs, REITs and its Unitholders under Finance Act 2020

Open Market for Buy-Back of Securities - SEBI

The Securities and Exchange Board of India (“SEBI”) introduced the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 (the “SEBI Regulations”) with effect from September 11, 2018, which govern buy-backs undertaken by a listed company.

A listed company’s shares and other specified securities can be bought back using any of the following methods:
Continue Reading Open Market for Buy-Backs: Key Considerations

mplications of the Finance Bill, 2020, on INVITs, REITs and its Unitholders

The Finance Minister, Nirmala Sitharaman, presented the Union Budget 2020-2021 on February 1, 2020 and consequently, introduced the Finance Bill, 2020 (“Bill”) in the Lok Sabha. The Bill comprises the financial proposals, including taxation related proposals, to amend the provisions of the Income-tax Act, 1961 (“Income-tax Act”) for the financial year 2021.

The Income-tax Act comprised provisions in relation to the taxability of, and exemptions available to, infrastructure investment trusts (“InvITs”) and real estate investment trusts (“REITs”, together with “InvITs”, referred to as “business trusts”) registered with the Securities and Exchange Board of India under the Securities Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) or the Securities Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 (“REIT Regulations”), respectively.
Continue Reading Implications of the Finance Bill, 2020 on INVITs, REITs and its Unitholders

Continuous disclosure obligations - Indian securities market

A regulatory environment that supports robust secondary market disclosures is critical for a well-functioning securities market. Ongoing disclosures by listed companies are being increasingly scrutinised by regulators, stock exchanges and market participants to see if timely and accurate disclosures of all material information are being made by the listed entity. Accordingly, it is important for companies to ensure that developments in their businesses translate to appropriate regulatory disclosures.

A recent example of the importance of secondary market disclosure is the Facebook case. In 2019, the US Securities and Exchange Commission (“SEC”) announced charges against Facebook Inc. (“Facebook”) for making misleading disclosures in its periodic filings against the risks pertaining to misuse of its user data by third parties. The SEC alleged that in public disclosures, Facebook presented the risk of misuse of user data as “merely hypothetical”, when they were aware that a third-party developer had actually misused Facebook user data. The SEC press release states that Facebook has agreed to pay $100 million to settle the charges.

We discuss this development and learnings for the Indian market below.
Continue Reading Continuous Disclosure Obligations: Learnings for the Indian Securities Market

SEBI-Streamlines-Rights-Issue-Process

The SEBI has streamlined certain aspects of the rights issue process that is expected to not only reduce the timelines but also provide clarity on the renunciation and trading of rights entitlements. These are welcome changes and will potentially make rights issues a preferred option to raise capital for listed companies.

Whilst rights issues are offerings to existing shareholders, it typically takes 55 to 58 days to complete the process (excluding SEBI review and the time taken for due diligence and drafting the offer document). The process involves (i) a minimum 15-day rights issue application period, (ii) mandatory participation by certain investors only through the non-ASBA process (such as through cheque) and (iii) a seven clear working days intimation prior to the record date. SEBI has addressed some of these concerns through amendments to the SEBI ICDR Regulations, SEBI Listing Regulations (both effective from December 26, 2019) and a circular with effect from February 14, 2020.
Continue Reading SEBI Streamlines Rights Issue Process

Electrosteel Steels Limited v. Securities and Exchange Board of India

On November 14, 2019, almost a decade after the initial public offering of Electrosteel Steels Limited (Electrosteel), the Securities Appellate Tribunal (SAT) delivered its judgment in Electrosteel Steels Limited v. Securities and Exchange Board of India[1] (the SAT Order). It partially upheld the judgment dated March 31, 2016 (SEBI Order) of the adjudicating officer of the Securities and Exchange Board of India[2] (SEBI). The SAT Order has discussed the concept of ‘materiality’ in the context of disclosure in offer documents.
Continue Reading To Disclose or Not to Disclose? An Analysis of the Order of the Securities Appellate Tribunal in Electrosteel Steels Limited v. Securities and Exchange Board of India

Depository Receipts - SEBI Framework SMM

The Securities and Exchange Board of India (SEBI) has introduced a framework for issuance of depository receipts (DRs) by companies listed or to be listed in India ( DR Framework), by its circular dated October 10, 2019.

In the early years of liberalisation and up to the time SEBI permitted qualified institutions placement (QIPs) in 2006, DR issuances formed a significant and important part of foreign investment into the Indian equity markets. However, in the past five years, there have been very few DR issuances, for a variety of reasons including due to regulatory uncertainty around operational guidelines for DRs and concerns in relation to compliance with rules under the anti-money laundering legislation.
Continue Reading SEBI Introduces Framework for Issuance of Depository Receipts

The Sound of SEBI’s Silence Will the Factorial Order Change the Rules of the Game

Last month, the Securities Appellate Tribunal (SAT) passed an order in favour of Factorial Master Fund[1] (Factorial). This overturned the order of the SEBI Whole Time Member who had held that Factorial had contravened the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) by trading in the securities of L&T Finance Holdings Limited (LTFH), while in possession of unpublished price sensitive information (UPSI).Continue Reading The Sound of SEBI’s Silence: Will the Factorial Order Change the Rules of the Game?