FAQs on Regulatory Amendments to AIF Regulations (Ambiguous GAAR Style Obligations Prescribed for Managers and KMPs)

The Securities Exchange Board of India (“SEBI”) has notified amendments to the SEBI Alternative Investment Funds Regulations, 2012 (“SEBI AIF Regulations”) on April 25, 2024, to:Continue Reading FAQs on Regulatory Amendments to AIF Regulations (Ambiguous GAAR Style Obligations Prescribed for Managers and KMPs)

Case-Specific Exemptions under the Takeover Regulations: Key Takeaways from SEBI’s Orders

Background

In terms of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”), acquiring control and/or shares/voting rights of a listed company beyond the specified quantitative thresholds (i.e. initial acquisition of 25% or more of the voting rights; or subsequent acquisition by a person holding at least 25%, of more than the creeping acquisition limit of 5% voting rights in a financial year) can trigger an obligation to make an open offer to its shareholders (“Open Offer”). Continue Reading Case-Specific Exemptions under the Takeover Regulations: Key Takeaways from SEBI’s Orders

Holding-Subsidiary Relationship – Legal & Regulatory Architecture

Background

Companies, as the business grows, operate through their subsidiaries for various reasons such as flexibility in operation of different units, expansion in different geographies, etc. While subsidiary is an entity over which the wholly owned subsidiary has control, the Companies Act, 2013 (“CA 2013”) recognises subsidiary companies as a separate legal entity.Continue Reading Holding-Subsidiary Relationship – Legal & Regulatory Architecture

When is a Holding Company liable for the acts and omissions of its Subsidiary? A Jurisprudential Analysis

The Companies Act in India and jurisdictions all over the world have statutorily recognised subsidiaries as a separate legal entity. Section 2(87)[1] of the Companies Act, 2013 (“CA 2013”), defines “subsidiary company” or “subsidiary” as a company in which the holding company controls the composition of the Board of Directors; or exercises or controls more than one-half of the total voting power either on its own or together with one or more of its subsidiary companies.Continue Reading When is a Holding Company liable for the acts and omissions of its Subsidiary? A Jurisprudential Analysis

Substantial Issues in Defining “Substantially the Whole of the Undertaking”

Section 180(1)(a) of the Companies Act 2013 (“2013 Act”) requires a company to obtain prior approval by a special resolution to sell, lease or dispose of the whole or substantially the whole of the undertaking of the company or, when the company owns more than one undertaking, of the whole or substantially the whole of any of such  undertakings.Continue Reading Substantial Issues in Defining “Substantially the Whole of the Undertaking”

Purpose & Effect Test for RPTs – How should Audit Commitees navigate it?

Regulatory Context

The definition of ‘Related Party Transaction’ (“RPT”) under Regulation 2(1)(zc) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”), inter alia provides that with effect from April 1, 2023, a transaction involving transfer of resources, services or obligations between “a listed entity or any of its subsidiaries on one hand, and any other person or entity on the other hand, the purpose and effect of which is to benefit a related party of the listed entity or any of its subsidiaries,” will also be regarded as an RPT (referred to below as the “Purpose and Effect Test”).Continue Reading Purpose & Effect Test for RPTs – How should Audit Commitees navigate it?

Permissibility of Pledges: Decoding SEBI’s View

The efficiency of the securities market depends on equal access to information and ensuring information symmetry for all stakeholders. Many Indian listed entities have significant promoter/ promoter group shareholding, which gives them the advantage of asymmetrical access to unpublished information. For free and fair trade in the financial market, a level-playing field between the promoter/ promoter group and retail shareholders is crucial. This is why there is prohibition on communication of Unpublished Price Sensitive Information (“UPSI”) and insider trading.Continue Reading Permissibility of Pledges: Decoding SEBI’s View

Recommendations on Changes to SEBI ICDR Regulations for Ease of Doing Business – Missing the Point

On January 11, 2024, SEBI issued its consultation paper on interim recommendations of its expert committee to harmonise the SEBI ICDR and LODR regulations.  The public has been invited to share comments on this paper.Continue Reading Recommendations on Changes to SEBI ICDR Regulations for Ease of Doing Business – Missing the Point