FIG Paper (No. 34 – Data Law Series 5) Balancing Sectoral Regulation and DPDP Act Compliance by NBFCs & Fintechs

Background

Indian regulators in recent times have shown a keen interest in monitoring the intersection between data, information technology, and cybersecurity with regulated entities—more so in relation to Non-Banking Financial Companies (“NBFCs”) and ‘fintechs’. With the expected enforcement of the Digital Personal Data Protection Act, 2023 (“DPDP Act”), and the promulgation of its rules, it becomes imperative for NBFCs and fintechs to map their journey of compliance from legal and regulatory perspectives.Continue Reading FIG Paper (No. 34 – Data Law Series 5) Balancing Sectoral Regulation and DPDP Act Compliance by NBFCs & Fintechs

Purpose & Effect Test for RPTs – How should Audit Commitees navigate it?

Regulatory Context

The definition of ‘Related Party Transaction’ (“RPT”) under Regulation 2(1)(zc) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”), inter alia provides that with effect from April 1, 2023, a transaction involving transfer of resources, services or obligations between “a listed entity or any of its subsidiaries on one hand, and any other person or entity on the other hand, the purpose and effect of which is to benefit a related party of the listed entity or any of its subsidiaries,” will also be regarded as an RPT (referred to below as the “Purpose and Effect Test”).Continue Reading Purpose & Effect Test for RPTs – How should Audit Commitees navigate it?

Recommendations on Changes to SEBI ICDR Regulations for Ease of Doing Business – Missing the Point

On January 11, 2024, SEBI issued its consultation paper on interim recommendations of its expert committee to harmonise the SEBI ICDR and LODR regulations.  The public has been invited to share comments on this paper.Continue Reading Recommendations on Changes to SEBI ICDR Regulations for Ease of Doing Business – Missing the Point

Enforcing progressive compliance: Push for digitalisation by dematerialising shares of all companies

Pursuant to the issuance of the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023, with effect from September 30, 2024, both public and private limited companies are required to convert the existing shares and issue new shares exclusively in dematerialised form, bringing an end to physical share certificates. While this seems like a small change, this post seeks to trace the transformation of ‘dematerialisation’ from a progressive and secure option for security holders to a compliance requirement, signifying an increased and progressive threshold of regulation. The post also highlights the key challenges that companies and investors may face with this change.Continue Reading Enforcing progressive compliance: Push for digitalisation by dematerialising shares of all Companies

End of the Party for Sin (Fin) Fluencers? SEBI’s Regulatory Crackdown on Finfluencers

Introduction

Social media platforms have become an essential communication tool in the post pandemic world. The advent of the COVID-19 pandemic led to a sustained rise of retail investors on the D-Street, in an eager attempt to profit from the great COVID bull run. Ever more, retail investors are looking at influencers on social media platforms for financial advice instead of approaching registered advisors (without evaluating the life alerting consequences it may have).Continue Reading End of the Party for Sin (Fin) Fluencers? SEBI’s Regulatory Crackdown on Finfluencers

RBI FURTHER PIERCES THE WIRE TRANSER VEIL KYC Guidelines

In its constant endeavour to combat money laundering, terrorist financing, and financing of other illegal activities, the Reserve Bank of India (“RBI”) has, vide a letter dated May 4, 2023, amended the Master Directions on Know Your Customer, 2016 and instructed all banks, financial institutions and other Regulated Entities (“REs”) to comply with the newly added KYC norms for wire transfers (“RBI Instructions”). It is a known fact that money launderers across the world have been using wire transfers for long now, as a means to facilitate illegal acts, owing to less/ no regulatory scrutiny.Continue Reading RBI Further Pierces The Wire Transfer Veil

The Securities and Exchange Board of India (“SEBI”) has recently introduced significant changes to the governance framework for listed companies through an amendment to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”).

The amendments were signaled by various consultation papers issued by SEBI over the last 6-9 months, including consultation papers on ‘Review of disclosure requirements for material events or information under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015’ and ‘Strengthening Corporate Governance at Listed Entities by Empowering Shareholders – Amendments to the SEBI (LODR) Regulations, 2015’.Continue Reading SEBI Amendments to the LODR – An Overview of Key Changes

Background

On June 15, 2023, Securities and Exchange Board of India [“SEBI”] had released— (i) Master Circular for Investment Advisers; and (ii) Master Circular for Research Analysts.

The Master Circulars serve as comprehensive compilations of all directions issued by SEBI pertaining to Investment Advisers [“IAs”] and Research Analysts [“RAs“]. SEBI’s Master Circulars for IAs and RAs aim to provide easy access to relevant guidelines and promote compliance among IAs and RAs.Continue Reading FIG Paper No. 22: Decoding SEBI’s Master Circular for Investment Advisers and Research Analysts

SEBI’s MUTUAL FUND EXPENSE RATIO CONSULTATION PAPER

BACKGROUND

On May 18, 2023, the Securities and Exchange Board of India [“SEBI”] had placed a consultation paper related to the total expense ratio charged by Asset Management Companies [“AMC”] to unitholders of mutual funds. June 8, 2023 was set as the deadline for submission of public comments. The due date, however, was extended to June 8, 2023.

The proposal is aimed at curbing distributor practices such as unnecessary switching of schemes and pushing new fund offerings for higher commissions. SEBI in its consultation paper proposed to introduce performance fees for funds. It proposed two approaches, but also suggested testing the models under the Regulatory Sandbox.Continue Reading FIG Paper (No. 21 – Series 1): SEBI’s Mutual Fund Expense Ratio Consultation Paper: Impact Analysis

FIG Paper

BACKGROUND

While the Reserve Bank of India (“RBI”) had in its August 10, 2022 press release stated that it is examining the First Loss Default Guarantee (“FLDG”) structures, the Digital Lending Guidelines issued by the RBI on September 2, 2022 neither permitted nor expressly prohibited loss sharing arrangements such as FLDGs, but recommended that provisions of paragraph 6(c) of the Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021 dated September 24, 2021 (“Securitisation MD”) be adhered to for financial products involving contractual agreements such as FLDG. Paragraph 6(c) of Securitisation MD prohibits Regulated Entities (“RE”) from undertaking or assuming exposure under “synthetic securitisation” structures. This led to industry-wide confusion regarding the permissibility of loss sharing arrangements such as FLDG.Continue Reading FIG Paper (No.18 – Series 2) RBI’s New Default Loss Guarantee Guidelines: Late but Not lost