SEBI

Summary: SEBI’s recent informal guidance on the appointment of an independent director related to a promoter group member has reignited the debate on the meaning of “independence” in corporate governance. While the guidance adopts a strict interpretation of the statutory definition of “relative” under the Companies Act, 2013, it raises broader questions about whether formal legal criteria adequately capture concerns of influence and objectivity. This article examines the guidance note in the context of the legislative framework governing independent directors and compares it with the views expressed by key committees on corporate governance. It argues that the effectiveness of independent directors depends not only on compliance with prescribed objective eligibility requirements but also on preserving the substantive spirit of independence that underpins the institution.

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SEBI Order Penalises Outsourcing of Core Functions: Structuring Lessons for Asset Management Industry

Summary: This blog analyses a recent SEBI order dated May 26, 2026, which penalised a portfolio manager for outsourcing core investment functions to a technology company under the guise of “technology consulting”. SEBI held that the prohibition on outsourcing core activities under the Outsourcing Circular and Applicable Laws is absolute, and that “investment decisions” extend beyond model portfolio approval to include all downstream steps such as quantities, timing, and client-level trade execution. The portfolio manager and its key personnel were restricted from onboarding new clients for 21 days and were collectively penalised Rs 42,00,000. The article draws broader structuring lessons for the asset management industry, cautioning that SEBI will look at substance over form, that fee structures linked to performance fees signal participation in the investment process, and that individuals in control will face personal liability.

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Summary: This blog explores SEBI’s informal guidance on the creation and invocation of pledged shares, particularly for financing of ESOPs, and the expansion of compliance officers’ obligation to determine what constitutes a “bona fide” transaction.

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Is Your ESOP Plan Ready for the Updated Proxy Advisory Playbook?

Summary: This article examines how proxy advisory firms have meaningfully tightened their scrutiny of Employee Stock Option Plan (“ESOP”) proposals, evaluating them on regulatory compliance as well as on governance standards. It explores the key areas of concerns in relation to dilution, exercise price, Board discretion, extension of benefits to group companies, etc., and highlights the practical risks companies face when ESOP schemes are drafted without first engaging with the updated proxy advisory guidance.

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A Digital Future for Corporate Governance in India

Summary: This article examines India’s transition towards digital corporate governance, where technology is increasingly used for compliance monitoring, risk management, and board communications. It highlights the need for India’s legislative framework to adapt to these technological changes and establish clear regulations on AI usage, cybersecurity, and data protection, to ensure that digital transformation enhances efficiency without compromising shareholder rights or procedural safeguards. The article provides practical recommendations for companies to strengthen cybersecurity, leverage AI tools for compliance and decision-making, and prepare for a future where digital governance becomes the default standard.

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Summary: The SEBI, vide its Consultation Paper dated February 5, 2026, has proposed amendments to the existing AIF Regulations related to the winding up of AIF schemes and the surrender of AIF registrations. The proposal seeks to address challenges faced by AIFs that retain liquidated proceeds beyond the permissible fund life due to pending or anticipated litigation, tax contingencies, or residual operational expenses. The key proposals include (i) permitting AIFs to surrender their registration while retaining funds, with such AIF schemes being designated as inoperative funds, subject to rationalised compliance obligations; (ii) permitting retention of funds for anticipated liabilities, subject to the consent of a super-majority of investors; and (iii) permitting retention of funds for operational expenses for up to 3 (three) years. SEBI has invited public comments on the Consultation Paper until February 26, 2026.

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CCPS: An important instrument for startups and M&A structuring

Summary: This blog examines compulsorily convertible preference shares (CCPS), a vital capital raising instrument for startups and M&A transactions in India. It explores the legal framework and key benefits, including balancing investor-founder interests, attracting foreign investment, avoiding tax implications, and providing strategic flexibility, despite limited legislative guidance.

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The Securities Market Code, 2025 (Bill No. 200 of 2025): Raising the Bar to Embrace the Future

Summary: This blog examines the Securities Market Code Bill, 2025, in terms of key changes, and their implications for SEBI and the securities market. SEBI’s regulatory role, along with increased involvement of market infrastructure institutions, securities market service providers and self-regulatory organisations, is poised for significant reform. While the shift towards a principle-based statute upholding good governance, natural justice, transparency and accountability is laudable, certain challenges relating to implementation and capacity-building should be addressed.

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Summary: Every time a serious governance failure is discovered, the subject of corporate governance and the role of independent directors take centre stage and become the subject matter of intense media debate. The reality is that independent directors are non-executive directors and have a limited role to play in the day-to-day management of the company. This blog examines the need for regulators to strike a healthy balance between authority and responsibility. The author appeals to the regulators to re-examine the roles and responsibilities of independent directors and set realistic expectations.

Continue Reading India Inc’s Governance Dilemma: Are Expectations from Independent Directors Unrealistic?
SEBI’s final word on Merchant Bankers Regulations – Notification of key amendments

Summary: This blog deals with the key changes introduced in terms of the SEBI (Merchant Bankers) (Amendment) Regulations, 2025, issued through a notification dated December 3, 2025. Building on SEBI’s proposals, this piece outlines how the amendments overhaul the existing SEBI (Merchant Banker) Regulations, 1992 for the first time since their introduction and highlights the major reforms that will come into effect from January 1, 2026.

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