In recent years, investors and customers alike have been gung-ho about ESG, so much so that it has found its way into day-to-day commercial lingo. The term ESG stands for Environmental, Social and Governance and refers to three key factors when measuring sustainability and the ethical impact of an investment in a business or company.[1]
Continue Reading Interplay between ESG and M&A transactions: Key factors to consider
On February 1, 2012, the Securities and Exchange Board of India (“SEBI”) had introduced the mechanism for offer for sale through the stock exchange (the “Stock Exchange OFS”) with the intention of facilitating offloading by promoters and promoter group members in listed companies. It was expected to bring in transparency in secondary transactions as well as draw wider participation. The introduction of the Stock Exchange OFS was also a recognition of limitations of then existing methods for achieving minimum public shareholding (the “MPS”), i.e. taking the public issue route, which was both time consuming and cumbersome.
Context
In an earlier article under the ‘Gatekeepers of Governance’ series, the authors had discussed how the regulatory architecture under the Companies Act, 2013 (“Act”), and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”), places ‘independent directors’ (“IDs”) at the forefront of India’s quest for better corporate governance. However, it is often forgotten that along with IDs, even non-executive non-independent directors (“NENIDs”) on the Board can play a pivotal role in acting as a ‘watchdog’, and safeguarding stakeholder interest.
Continue Reading Gatekeepers of Governance: Non-Executive Non-Independent Directors
The Ministry of Corporate Affairs (“MCA”) is entrusted with the responsibility of administering the Companies Act, 2013 (“2013 Act”). To this end, it has issued many a circulars to clarify the provisions of the 2013 Act and the rules made thereunder from time to time. On important matters like CSR, the ministry has issued detailed FAQs in the form of clarificatory circulars. Till date, the MCA has issued more than 210 clarificatory circulars under the 2013 Act.
Continue Reading Are Ministry of Corporate Affairs (MCA) Circulars constitutionally valid?
The regulatory architecture under the Companies Act, 2013 (“Act”), and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”), envisages a key role for the Nomination and Remuneration Committee of the Board of Directors (“NRC”) – in ensuring that the company attracts and retains the best talent – and there is transparency in the process of appointment/ re-appointment and payment of remuneration to directors, key managerial personnel (“KMPs”) and senior management[1].
Continue Reading Gatekeepers of Governance – Nomination and Remuneration Committee
The regulatory architecture under the Companies Act, 2013 (“Act”), and the SEBI (LODR) Regulations, 2015 (“LODR”), places independent directors (“IDs”) at the forefront of India’s quest for better corporate governance. Given that approximately 75% of listed companies in India are promoter-controlled, the MCA and SEBI have envisaged that the IDs will play a key role in safeguarding minority shareholders’ interest.
Continue Reading Gatekeepers of Governance – Independent Directors
To enhance the standardisation of the application process, SEBI, on November 3, 2022, published ‘FAQs for grant of registration as alternative investment fund’[1] (“FAQs”). The FAQs are guidelines for submission of the application for seeking registration as an Alternative Investment Fund (“AIF”). In addition to the information, documents and undertakings mandated under the First Schedule of the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”), an applicant will now be required to submit information, documents and undertakings, as reproduced in this article. Thus, the application form will now constitute the following, (a) information as specified under the First Schedule of the AIF Regulations; and (b) other information as specified in the FAQs.
Continue Reading SEBI prescribes additional requirements for registering AIFs
The Securities and Exchange Board of India (SEBI) has recently issued a consultation paper on review of the disclosure requirements as applicable to listed companies. Regulation 30 of the Listing Obligations and Disclosure Requirements (LODR) Regulations prescribe the material events or information that is to be duly disclosed by listed companies to the stock exchanges. It is divided into two parts – Para A contains events that are deemed material, and Para B contains items that are to be disclosed basis application of the materiality policy of the respective companies. SEBI has indicated several reasons for review of the current regime – including investor complaints on asymmetrical disclosure of information and company complaints on lack of uniform guidance.
Continue Reading SEBI’s recent proposal on tweaking the LODR Disclosure Regime – More Spill and Tell
In October 2022, the Securities and Exchange Board of India (“SEBI”) introduced several amendments to various chapters of its Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper, dated August 10, 2021 (“Operational Circular”), in response to certain representations received by it from various market participants. These modifications appear to be in line with SEBI’s continued efforts to improve the accessibility, fairness, and transparency of the debt securities market.
Continue Reading Changes to SEBI’s framework on non-convertible debt securities: A Snapshot
The Securities and Exchange Board of India (“SEBI”) has updated the regulatory framework applicable to AIFs/ VCFs, seeking to make portfolio investments in offshore companies vide SEBI Circular dated August 17, 2022, titled ‘Guidelines for overseas investment by Alternative Investment Funds (AIFs)/ Venture Capital Funds (VCFs)’ (“SEBI Circular”). AIFs/ VCFs are currently permitted to make portfolio investments in equity and equity linked instruments of offshore venture capital undertakings[1], subject to taking case by case approval of SEBI for each such investment. Such approval is granted by SEBI to AIFs/ VCFs on a ‘first come first serve basis’, within an overall limit of USD 1,500 million.