Even after the ‘right to property’ was abolished as a fundamental right by the 44th Amendment to our Constitution[1], it has continued as a ‘constitutional right’ by virtue of Article 300-A, which provides that – “No person shall be deprived of his property save by authority of law”.Continue Reading Disenfranchising Majority Shareholders – Is it Constitutionally Valid?
The Securities and Exchange Board of India (“SEBI”) vide its circular dated February 05, 2020, had introduced certain disclosure standards by way of a private placement memorandum (“PPM”) template that all SEBI registered Alternative Investment Funds (“AIFs”) were expected to adhere to. The PPM template inter-alia provided for disclosures under the term “Excuse and Exclusion” and “Direct Plan for investors and constituents of fees that may be charged by the AIFs”.Despite the PPM template, SEBI observed certain disclosure-related inconsistencies and lack of transparency. SEBI by way of circulars dated April 10, 2023, updated the regulatory framework by way of new guidelines to bring in consistency related to disclosures in the PPM.Continue Reading SEBI Codifies Norms for Excuse and Exclusion and Direct Plan for Investors
The cardinal principle of company law, as enshrined under Section 129(1) of the Companies Act, 2013 (“Companies Act”), is that the financial statements (“FS”) should give a ‘true and fair view’ of the state of affairs of the company, comply with the accounting standards notified under Section 133, and also be in the form provided for different classes of companies under Schedule III.Continue Reading Non-compliance with Accounting Standards – Will it amount to an FUTP Offence?
The concept of promoter and promoter group of a listed company finds a mention in the SEBI regulations, and assumes significance as it impacts a wide range of M&A transactions involving listed companies. After closing in a change in control deal, one needs to follow the conditions prescribed in Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations), to re-classify the outgoing promoter. The conditions in Regulation 31A are onerous, cumbersome, and not in consonance with the way the transacting parties and market participants think. We will also explain below how Regulation 31A is not in consonance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations), and does not reflect the realities of deal making and therefore, needs a change.Continue Reading Fresh Look Needed for Re-Classification of Promoters
SEBI has been progressively tightening the regulatory regime surrounding transactions impacting listed entities – beginning with the implementation of the Kotak Committee recommendations on related party transactions (RPTs) through amendments to the LODR Regulations on May 9, 2018. Shortly thereafter, in November, 2019, SEBI constituted a Working Group (WG) to re-examine the RPT provisions of LODR Regulations, which resulted in the markets regulator notifying amendments on November 9, 2021, which took effect from April 01, 2022. These amendments brought about a paradigm shift by making the RPT approval and disclosure requirements applicable to listed companies in India very expansive and stringent.Continue Reading Proposed Amendments to LODR on Agreements Affecting Listed Companies – Swatting Flies with a Sledgehammer?
The Securities and Exchange Board of India (“SEBI”), after much deliberation, replaced the 2009 SEBI Delisting Regulations with the SEBI Delisting Regulations in 2021. The current delisting regime is essentially under two routes, (i) voluntary delisting by the exiting promoters under the SEBI Delisting Regulations, and (ii) delisting by non-promoters/ third party acquirers under Regulation 5A of the SEBI Takeover Regulations.Continue Reading Need for Amendments to the Delisting Regime in India
Introduction
In December 2022, SEBI’s Board approved certain amendments to the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 (the “Existing Regulations”). These amendments were published on February 7, 2023, pursuant to the Securities and Exchange Board of India (Buy-Back of Securities) (Amendment) Regulations, 2023 (“Amendment Regulations and with the Existing Regulations the “Buyback Regulations”). The Amendment Regulations come into force from the 30th day of their publication in the official gazette, i.e. on March 9, 2023. The emphasis of several of the amendments was on simplifying the buyback process, by eliminating certain methods of buyback and reducing overall timelines.Continue Reading Simplifications and Eliminations: A Synopsis of the Amended Buyback Regulations
The Securities and Exchange Board of India (“SEBI”) released five consultation papers on proposed changes in regulatory norms for alternative investment funds (“AIFs”), inviting comments from the public, on February 03, 2023. These consultation papers indicate the next generation of regulatory reforms that SEBI has planned for AIFs.Continue Reading SEBI Unveils Next Generation Reforms for AIFs
The rise of domestic capital in alternative asset space requires the AIF Regulatory Platform be made available to In-house Funds
The Indian growth story has been propelled by alternative asset classes that witnessed an unprecedented inflow of domestic and foreign capital in the last few years. Alternative Investment Funds (“AIFs”) have played an essential role in this and have raised, as on June 30, 2022[1], a whopping INR 6,94,520 crore (Indian Rupees Six lakh ninety-four thousand and five hundred twenty crore), of which actual deployed capital stands at INR 3,11,343 crore (Indian Rupees Three lakh eleven thousand and three hundred forty-three crore). These numbers are up from INR 2,90,339 crore (Indian Rupees Two lakh ninety thousand and three hundred thirty-nine crore) of capital raised and INR 1,19,758 crore (Indian Rupees One lakh nineteen thousand and seven hundred fifty-eight crore) of actual capital deployed, as on June 30, 2019[2]. Securities and Exchange Board of India (“SEBI”), being the capital market regulator in India, has played an active role in streamlining the AIF industry. SEBI’s proactive and investor-friendly approach is often reflected in the discourses with market participants as well as in the guidelines / circulars / regulations issued for the AIF industry.Continue Reading An Argument for In-house Alternative Investment Funds
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