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Enforceability of Put Options under SCRA – Bombay HC’s latest judgment finally clears the air!  

Historical Background

The legal position with respect to enforceability of put option clauses has not been a glorious chapter in the history of India’s securities law. The genesis of this vexed issue lies in – (i) the erstwhile Section 20 of the Securities Contracts (Regulation) Act, 1956 (“SCRA”) which had provided that all options in securities shall be illegal[1]; and (ii) a notification issued by the Ministry of Finance in 1969, which inter alia provided that any contract for sale or purchase of securities, other than such spot delivery contract or contract for cash or hand delivery or special delivery in any securities shall be prohibited[2] (“1969 Notification”).

Continue Reading Enforceability of Put Options under SCRA – Bombay HC’s latest judgment finally clears the air!  
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Shareholders Rights

In a corporate democracy, the rule of majority prevails, period! Hence, in most jurisdictions, shareholders’ resolutions may be passed by a simple majority, or, where the decision may be critical to the operations or the future of a company, by a super/ special majority of at least, three-fourths. In this way, the decision of the majority binds all members/ shareholders.

Continue Reading Protection and Redressal of Minority Shareholder Rights
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Insolvency & Bankruptcy Code

Over the last few years, several cases of defaulting real estate companies, including major players like, Amrapali, Jaypee Infratech and Supertech, have been stuck at various stages of insolvency proceedings under the provisions of the Insolvency and Bankruptcy Code, 2016, as amended (“Code”). As per the data provided by Insolvency and Bankruptcy Board of India (“IBBI”), a total of 344 corporate debtors engaged in construction and real estate activities have been admitted into corporate insolvency resolution process (“CIRP”) as of September 2022.[i]

Continue Reading Proposed Amendments to the Insolvency and Bankruptcy Code- A Real Solution For Real Estate Insolvencies?
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SEBI

Background

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?
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Advances in drug research over the years have resulted in the development of blockbuster drugs, which have increased the life expectancy of mankind. In the past decade, scores of patients across the globe suffering from rare or chronic ailments had limited treatment options due to unavailability / pending approval of life-saving drugs in their countries. From a legal standpoint, a drug is only permitted to be obtained and used by a patient once such drug has been granted the requisite approvals from the requisite drug regulatory authorities of such country after following proper clinical trial protocols that establish safety and efficacy of such drugs. With rising costs of drug trials, not every drug is submitted for approval in every country yet disease conditions that warrant use thereof still exist. Following representations from medical professionals and stakeholders to cater to such situations, drug regulators realized the need to ensure that such drugs are made available to those who need them irrespective of approval status. Currently, numerous expressions such as ‘usage on compassionate grounds’, ‘expanded access’ and ‘preapproval use’ exist to describe this concept and are used interchangeably[1].    

Continue Reading Use of unapproved drugs in India on compassionate grounds- Unravelling the Regulatory Conundrum
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SEBI Delisting Regime

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
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Financial institutions have invested heavily into artificial intelligence (“AI”) and machine learning (“ML”) techniques globally, and in India, over the past decade. There are estimates that AI technologies could potentially contribute towards US$ 1 trillion in additional value for the global banking sector, and a World Economic Forum survey indicated that seventy seven per cent of all respondents (151 fintechs and financial institutions from thirty three countries) anticipated AI to possess a high or a very high overall importance in their businesses in the near future. Tangible use-cases in the financial sector have resultantly sprung, benefitting both customers and investors through robo advisors, portfolio optimisation, and algorithmic trading bots. Financial institutions on their part have benefitted greatly through chat bots handling consumer interactions and grievances, identity verification (including video KYC), predictive analytics to mitigate and minimise frauds, etc.

Continue Reading FIG Paper (No. 19 – Series 1)- AI/ ML, ChatGPT: Legal and regulatory considerations for financial service use-cases
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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
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Introduction

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
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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