SEBI

LODR Disclosure Regime

The Securities and Exchange Board of India (SEBI) has recently issued a consultation paper on review of the disclosure requirements as applicable to listed companies. Regulation 30 of the Listing Obligations and Disclosure Requirements (LODR) Regulations prescribe the material events or information that is to be duly disclosed by listed companies to the stock exchanges. It is divided into two parts – Para A contains events that are deemed material, and Para B contains items that are to be disclosed basis application of the materiality policy of the respective companies. SEBI has indicated several reasons for review of the current regime – including investor complaints on asymmetrical disclosure of information and company complaints on lack of uniform guidance.Continue Reading SEBI’s recent proposal on tweaking the LODR Disclosure Regime – More Spill and Tell

SEBI

In October 2022, the Securities and Exchange Board of India (“SEBI”) introduced several amendments to various chapters of its Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper, dated August 10, 2021 (“Operational Circular”), in response to certain representations received by it from various market participants. These modifications appear to be in line with SEBI’s continued efforts to improve the accessibility, fairness, and transparency of the debt securities market.Continue Reading Changes to SEBI’s framework on non-convertible debt securities: A Snapshot

Payment System Operators New M&A Implications

Background:

On July 4, 2022, the Reserve Bank of India (“RBI”) clarified to all banks and non-bank payment system operators (“PSOs”) that its prior approval would be required for any (a) takeover/ acquisition of control, which may or may not result in change of management; and (b) sale/ transfer of payment activity to an entity not authorised for undertaking similar activity (“Circular”).Continue Reading FIG Paper (No. 15 – Series 1) – Payment System Operators (PSOs) – New M&A Implications

Subhkam Returns SAT Ruling in NDTV Case

The challenge in interpreting ‘control’ under the SEBI takeover regime is hardly a new one. The current definition of ‘control’ under the Takeover Regulations, 2011, similar to the one under the Takeover Code, 1997, consists of two parts. Firstly, the right to appoint a majority of the directors on the board of a company, which is fairly straightforward to determine; and secondly, the right to control the management and policy decisions of a company, which is where things tend to become slightly murky specially in the context of a minority shareholder exercising veto or affirmative vote rights.Continue Reading Subhkam Returns: SAT Ruling in NDTV Case

REIT

The Securities and Exchange Board of India (SEBI) issued a circular in April this year (Circular), reducing timelines for REIT listings from 12 working days to six working days from the date of public issue closure. While this is a welcome move from the perspective of public investors and is yet another step towards ensuring parity between REIT and listco regimes, this could prove challenging for REITs and their advisors, given the intricacies of the REIT regulatory framework.Continue Reading Reduction in REIT Listing Timelines – A Sprint to the Finish Line?

Analysis of recently attempted Voluntary Delistings

The number of voluntarily delistings seen in the last 1 (one) year has surpassed the number of delistings attempted earlier in a single year. Promoters are choosing to voluntarily delist their companies from the stock exchanges for various reasons including stock market price not being reflective of true value of the company’s stock, having full control over operations (without being required to go for any public vote for critical transactions), restructuring of their group entities, greater flexibility and reducing costs related to numerous regulatory compliances.

Even the Securities and Exchange Board of India (SEBI) introduced various amendments (mostly for tightening of procedure) under the new SEBI (Delisting of Equity Shares) Regulations, 2021 (2021 Delisting Regulations). The 2021 Delisting Regulations replaced the old SEBI (Delisting of Equity Shares) Regulations, 2009 (2009 Delisting Regulations). However, the key elements of a delisting process i.e. requirement of super majority of minority shareholder being in favour of the delisting proposal and the bidding process through the reserve book build (RBB) mechanism remain the same even under the new 2021 Delisting Regulations.
Continue Reading Analysis of recently attempted Voluntary Delistings

RPT Regulations

Background

SEBI’s amendments to the regulatory architecture for related party transactions (“RPTs”) under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”) came into force from April 1, 2022[1] (“RPT Regulations”), bringing about a paradigm shift in the RPT approval and disclosure requirements applicable to listed companies in India.[2]Continue Reading RPT Regulations – Some Suggestions for SEBI’s consideration

SEBI Clarifies Applicability of Portfolio Managers Regulations to an Indian Manager of an Offshore Fund

In an interpretative letter sought under the SEBI (Informal Guidance) Scheme, 2003 (“Informal Guidance”), the markets regulator has clarified that the investment manager of an alternative investment fund (“AIF”) can provide investment management services to an offshore fund only as a SEBI-licensed  portfolio manager under the SEBI (Portfolio Managers) Regulations, 2012 (“PM Regulations”). SEBI also reiterated that the investment managers of AIFs are considered to be regulated by SEBI. In this post, we will explore the queries, SEBI’s responses, and implications for the industry.Continue Reading SEBI Clarifies Applicability of Portfolio Managers Regulations to an Indian Manager of an Offshore Fund

ESOP Has SEBI Put an End to ‘Sell All’ Method of Cashless Exercise

Employee stock options are frequently used as an employee incentivisation and retention tool, given the benefit accrued over time. An ESOP-wrapped compensation is attractive because the gains from the shares acquired on exercise of employee stock options are much higher than the exercise price paid for the options. While the maximum or minimum price payable on exercise of the options is not prescribed by the law – which only lays down the requirement for the price to be accounting-standard compliant –  the price typically ranges from the face value of the share to the fair market value of the share.Continue Reading ESOP: Has SEBI Put an End to ‘Sell All’ Method of Cashless Exercise?

Regulatory overload on Audit Committees

Background

The regulatory architecture under the Companies Act, 2013 (“Act”), and the SEBI (LODR) Regulations, 2015 (“LODR”) places significant emphasis on the functioning of various committees of the Board of Directors (“Board”) of a listed company. While all Board committees have been entrusted with important responsibilities, a disproportionate amount of the regulatory burden has been placed on the Audit Committee. The Audit Committee has multifarious responsibilities under Section 177 and various other provisions of the Act, the LODR, and the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”).Continue Reading Gatekeepers of Governance – Audit Committee