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Proposal to make Companies with Outstanding Stock Appreciation Rights (SARs) eligible to undertake an IPO

Background

Historically, companies have provided employees with share-based incentives by way of employee stock options (“ESOPs”). However, with evolving corporate incentive structures, various new models have emerged, especially driven by start-ups. These incentives models include Stock Appreciation Rights (“SARs”), Restricted Stock Units (RSUs), Performance Stock Units (PSUs), Employee Share Purchase Schemes (“ESPS”), Phantom Stock Units (PSU), Save As You Earn Share Schemes (ShareSave), Non-qualified stock options (NSOs), Management Stock Options (MSOP), etc. Generally, employees look forward to an “exit event” to realise gains from these incentive structures, with an Initial Public Offering (“IPO”) being one of the most common “exit events”. Continue Reading Proposal to make Companies with Outstanding Stock Appreciation Rights (SARs) eligible to undertake an IPO

From Likes to Licenses: Regulating Finfluencers Amidst Stricter Norms

A distinct subset of social media influencers called “finfluencers” (short for “financial influencers”) has emerged in the recent past. According to the Advertising Standards Council of India (“ASCI”), “finfluencers” are individuals who disseminate information and advice on various financial topics, ranging from securities investment to personal finance and insurance, via social and digital media platforms.Continue Reading From Likes to Licenses: Regulating Finfluencers Amidst Stricter Norms

Regulatory framework governing employee benefits by equity listed companies

This post analyses the scope of the regulatory framework governing employee benefits by equity listed companies in India and the applicability of the SEBI (Share-Based Employee Benefits and Sweat Equity) Regulations, 2021, to employee welfare trusts set up by promoters and share-linked but purely cash-based employee benefits.Continue Reading Regulatory framework governing employee benefits by equity listed companies

Revamping the Investment Advisers and Research Analysts Frameworks – the SEBI Way

Introduction

Pursuant to the recommendations of the Ministry of Finance, the Securities and Exchange Board of India (“SEBI”) constituted several groups to recommend simplification of various regulations specified by it and invited suggestions from market participants[1]. Post deliberations on the suggestions received, the Working Group for review of compliance requirements for Investment Advisers (“IAs”) and Research Analysts (“RAs”) submitted its recommendations to SEBI’s Intermediaries Advisory Committee (“IAC”). SEBI has now released a consultation paper dated August 6, 2024, on ‘Review of Regulatory Framework for Investment Advisers and Research Analysts’ (“Consultation Paper”)[2] incorporating the recommendations proposed by IAC.Continue Reading Revamping the Investment Advisers and Research Analysts Frameworks – the SEBI Way

FIG Paper (No. 37 – Series 1) | SEBI Proposes to Introduce ‘New Asset Class’

Background and Key Features:

  • The Securities and Exchange Board of India (“SEBI”) regulates the asset management and wealth management sector through a graded approach in relation to prudential, governance and investment norms, with flexibility given progressively, basis minimum investment threshold. This sector has also seen a significant rise in assets under management (“AUM”) over the last decade:

Continue Reading FIG Paper (No. 37 – Series 1) | SEBI Proposes to Introduce ‘New Asset Class’

SEBI Proposes to Replace ‘Size Criteria’ for FPIs with ‘Risk-Based Approach’ for Granular Disclosure Requirement for Underlying Investors

SEBI had, vide its Circular dated August 24, 2023 (“August Circular”), laid down norms for FPIs/investor groups with assets under management (“AUM”) exceeding INR 25,000 (twenty five thousand) crore (“Size-based Criteria”). These norms require furnishing granular details[1] of all their investors/stakeholders on a look-through basis to ascertain if the FPI is effectively domiciled in a Land Bordering Country (“LBC”) or not. Subsequently, SEBI in its consultation paper dated July 30, 2024, (“Consultation Paper”) has proposed to replace the Size based Criteria with a “risk-based criteria” depending upon the participation of investors from “land bordering countries”. In addition to providing an overview of the extant laws, this blog covers the roadblocks emerging from the August Circular, SEBI’s proposal in the Consultation Paper, and its implications.Continue Reading SEBI Proposes to Replace ‘Size Criteria’ for FPIs with ‘Risk-Based Approach’ for Granular Disclosure Requirement for Underlying Investors

Managerial Remuneration – Should Promoters Be Disenfranchised?

Historical Context

The Government of India’s socialistic approach towards controlling managerial remuneration between 1960s and 1990s has been a painful chapter in the history of India’s company law. While the restriction applied only to those on the board of directors, the limits the then Department of Company Affairs had prescribed in its administrative guidelines under the Companies Act, 1956 in November 1969 was as low as INR 7,500 per month and further reduced to INR 5000 per month years later. Any payment beyond those limits required the Central Government’s approval, which was also a very cumbersome and time-consuming process. This led to the unhealthy practice of compensating Managing Directors and Executive Directors (“MD/EDs”) with cash reimbursements and many other inappropriate methods. Some MDs/ EDs also stepped down from the board to accept positions one level below the board. They were designated as presidents and vice presidents despite performing the role of the Managing Director.Continue Reading Managerial Remuneration – Should Promoters Be Disenfranchised?

SEBI Recognises Stock Exchanges as Supervisory and Administrative Body for Investment Advisers and Research Analysts

The Securities Exchange Board of India (“SEBI”) has released updated Master Circulars for Investment Advisers (“IAs”) and Research Analysts (“RAs”) on May 21, 2024 (“Master Circulars”).Continue Reading SEBI Recognises Stock Exchanges as Supervisory and Administrative Body for Investment Advisers and Research Analysts