The most valuable commodity I know of is information.

– Gordon Gekko, Wall Street

Over the past few weeks, the Securities and Exchange Board of India (SEBI) has passed three orders[1] (SEBI Orders) in the infamous ‘WhatsApp leak’ saga that has been in the news since November 2017[2]. Holding the impugned perpetrators guilty of violating insider trading regulations, the regulator has taken significant steps in pushing the boundaries of the concepts of insider, UPSI and insider trading.


Continue Reading SEBI and WhatsApp leaks: Every link in the chain matters

To battle the ongoing COVID-19 pandemic, the central government and the various state governments imposed a nationwide lockdown in India. Additionally, to arrest the spread of the pandemic, government authorities and corporates are promoting “work from home”, and wherever necessary to work with minimum work force. Acknowledging the difficulties faced by corporates on account of the threat posed by COVID-19, requiring social distancing in day-to-day functioning, governmental authorities have granted various exemptions and reliefs by issuing circulars and amending rules to ease compliance requirements to be complied by companies.

This blog analyses the recent reliefs and relaxations announced by the Ministry of Corporate Affairs, Government of India (MCA), and the Securities and Exchange Board of India (SEBI), which may have an impact on financing transactions.


Continue Reading Social Distancing while approving financing transactions: MCA, SEBI Relaxations

DISCLOSURE OF COVID-19 IMPACT BY LISTED ENTITIES - FINDING THE RIGHT BALANCE

Across India, each subsequent phase of the lockdown has permitted a responsible increase in economic activity. As companies re-start their operations, they continue to assess the impact of Covid-19 pandemic on their businesses and operations, which is rapidly and continuously evolving. Listed entities are particularly conscious of their disclosure obligations, more so after the Securities and Exchange Board of India (“SEBI”) issued a circular on May 20, 2020 (the “Circular”), that outlined the relevant considerations for companies in relation to the disclosures on the impact of Covid-19 on their businesses, performance and financials. The Circular is not only a restatement of the current principle-based disclosure regime, but is also indicative of the regulatory expectation on disclosures going forward in relation to impact of Covid-19 pandemic as it evolves.
Continue Reading Disclosure of Covid-19 Impact by Listed Entities – Finding the Right Balance

Overriding the IBC’s over-rider

Insolvency resolution regimes, globally, function as an exception to otherwise accepted norms of commercial law.[1] The Indian Insolvency and Bankruptcy Code, 2016 (“Code”), is no exception: a mere glance at the Code will display how it has a liberal sprinkling of non-obstante clauses.[2] From a specific dispute resolution mechanism, to an overarching carve out for insolvency resolution mechanism, the legislature has inserted non-obstante clauses in the Code as guidance of its intent. One would imagine that this would have ensured sufficient clarity for all stakeholders, avoided disputes and ensured timely insolvency resolution. Yet, as market participants try to understand the scope and intent of non-obstante clauses in the Code, such clauses continue to generate legal debate and litigation[3]. Perhaps, the stakes are too high for the parties to resist litigating. And some would argue not without good legal reason: after all, the Hon’ble Supreme Court has over the years identified exceptions[4] to the Latin maxim ‘leges posteriores priores contraries abrogant’ i.e. in the event two special statutes contain non obstante clauses, the non-obstante clause in the chronologically later special statute shall prevail[5].
Continue Reading Overriding the IBC’s Over-Rider?

SEBI CONSULTATION PAPER FOR LISTED COMPANIES WITH STRESSED ASSETS - CURE FOR THE SICK COULD BE VACCINE FOR ALL 

With the slowdown in the economy and unprecedented business disruption due to Covid 19, several Indian listed companies, which were already heavily leveraged, will soon be looking at avenues for further funding to meet working capital requirements and liquidity challenges. Given the current regulatory regime surrounding raising of equity capital, it is possible that some of the over-leveraged ones may become insolvent. With a view to facilitate fund raising by such listed companies that have stressed assets, the market regulator has come up with a consultation paper, that provides certain procedural relaxations to the SEBI (Issue of Capital and Disclosures Requirements) Regulations, 2018 (ICDR Regulations) and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations).
Continue Reading SEBI Consultation Paper For Listed Companies With Stressed Assets – Cure For The Sick Could Be Vaccine For All

Innocent Tippee Liability under Insider Laws

The SEBI Insider Trading Regulations prohibit trading in securities whilst in possession of unpublished price sensitive information (UPSI). It also states that when a person holds UPSI and trades in securities, his trades would be ‘presumed’ to have been motivated by the knowledge and awareness of such information in his possession.

Given that the burden of proof is on the insider to establish that his trade was not motivated by awareness of such information, the Regulations to provide statutory defences for the insider to prove his innocence. The stated defences, which are illustrative in nature, however, do not include a circumstance where a person has received UPSI and relied on it to make a trade under the assumption that it is publicly available information. The ‘innocent recipient’ was proposed as a statutory defence in the NK Sodhi High Level Committee Report, but did not find its way into the final form of the amended regulations. This defence was meant to be available if the recipient had no reason to believe that the information in his possession was UPSI or the person who communicated it to him violated any law or confidentiality obligation. As per the report, the insider would need to prove that he did everything reasonably in his power to confirm that the information in his possession was not UPSI (i.e. exercise of diligence expected of a reasonable man) and that he traded bona fide.
Continue Reading Innocent Tippee Liability under Insider Laws

 REITs in India - Some predictions for the next 24 months

  • Tenant-landlord dynamics are likely to change. In the short term, tenants may seek dispensation, moratoriums or discounts to their payment obligations, on the grounds of force majeure or otherwise. In the medium term, there will be an expectation from developers to increase spend on social wellness and hygiene infrastructure.
  • The forced experiment of remote working may become a norm for certain businesses and have an impact on the flexi-working policies of all businesses, one way or another. As a result, tenants may reassess their space utilisation requirements, and developers, their ability to offer IT infrastructure, which can enable seamless connectivity for their tenants.


Continue Reading REITs in India: Some predictions for the next 24 months (and beyond)

 Short-and-Long-term-Impact-of-Current-Market-Conditions-–-Part-II

Commercial and legal impact

In the previous part of this publication, we had set out an overview of the current market scenario and economic slowdown across key global markets, in view of factors such as global economic concerns, the COVID-19 pandemic as well as India-specific concerns such as the collapse of Yes Bank and pressure on Indian industries. We now evaluate the commercial and legal impact of these events on capital market transactions and highlight the key commercial and regulatory considerations for companies considering such transactions.
Continue Reading Short and Long-term Impact of Current Market Conditions – Part II

Buy-Backs by Listed Companies - Key Considerations

A listed company proposing to undertake a buy-back is required to primarily comply with the provisions of the Companies Act, 2013 (the “Companies Act”) and the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 (the “SEBI Regulations”). However, a listed company is also required to ensure compliance with the requirements of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “SEBI Takeover Regulations”), the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Foreign Exchange Management Act, 1999, the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and other applicable securities laws including in other jurisdictions.

As explained in our earlier blog, as prescribed in the SEBI Regulations, a listed company may undertake a buy-back of its shares and other specified securities through any of the following methods: (a) from the existing holders of securities on a proportionate basis through a tender offer; (b) from the open market either through the book building process or through the stock exchange mechanism; or (c) from odd-lot holders.
Continue Reading Buy-Backs by Listed Companies: Key Considerations

COVID-19 - Temporary Relaxations for Corporate Compliances

The global outbreak of coronavirus (COVID-19) is an unprecedented event that has led to lockdowns and unexpected restrictions on the public as well as the corporate sector across the world. In order to control its spread, the Government of India (GoI) has inter alia ordered all establishments, except organisations providing essential goods and services, to temporarily close their physical offices. Employees are working remotely, but due to difficulties faced in coordination and lack of office facilities, companies are likely to face difficulties in undertaking timely compliances of various applicable laws. Keeping in mind the aforesaid, the GoI has temporarily relaxed a number of compliance requirements for the corporate sector. We have analysed below some of the major relaxations from securities and companies law perspective.
Continue Reading COVID-19 – Temporary Relaxations for Corporate Compliances