Workshop on Structured Digital Database for Insider Trading: Preparing for the Compliance Certificate
| Click here to register for the workshop – https://forms.gle/JgWXqp2JJUBX4wPm8 |
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Open in new tab BSE & NSE simplify the compliance certificate format for Structured Digital Database (SDD), allows PCS certification
The essence of mens rea in insider trading
Supreme Court contradicts its previous ruling while considering the ‘intent’ in insider trading
– CS Aisha Begum Ansari | aisha@vinodkothari.com
Insider trading means dealing in the securities of the listed company on the basis of unpublished price sensitive information (‘UPSI’), thereby gaining an unfair advantage over the market. A person guilty of insider trading is punishable with a monetary penalty[1] under section 15G of the SEBI Act, 1992 (the ‘Act’). Further, under section 24 of the Act, SEBI can punish a person with imprisonment of upto Rs. 10 years or with a fine of upto Rs. 35 crores or both for violation of the Act and its regulations.
Read more →SEBI rationalizes issuances on Electronic Book Platform – Limits | Bidding Process | Anchor Investor | Basis of Allotment
– Kaushal Shah, Executive & Lovish Jain, Executive | corplaw@vinodkothari.com
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Also read our articles on the topic here
SEBI approves amendments: Alternate thresholds for ID Appointment | Online bond trading platform | Scheme of arrangement of NCS-listed entities | Trading in MF units
– Team Corplaw | corplaw@vinodkothari.com
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Related write-ups:
- SEBI proposes to regulate private debt platforms – https://vinodkothari.com/2022/07/sebi-proposes-to-regulate-private-debt-platforms/
- SEBI: Insider trading norms should apply to fund managers – https://vinodkothari.com/2022/07/sebi-proposes-to-extend-applicability-of-insider-trading-regulations-to-units-of-mutual-funds/
FAQs on half-yearly disclosure of RPTs to the stock exchanges
– Team Corplaw | corplaw@vinodkothari.com
Background
SEBI, vide its notification dated November 09, 2021 amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’) carrying out radical changes in the regulatory framework for the Related Party Transactions (‘RPTs’), including but not limited to the definition of Related Party (‘RP’), RPTs, its approval mechanism and disclosure requirements to the stock exchange. The amended provisions have been effective from April 01, 2022, except for the few provisions which will be applicable w.e.f. April 01, 2023. Information to be placed before the Audit Committee and shareholders (in case of material RPT) and the format of disclosure of RPTs to be filed with the Stock Exchanges (‘SEs’) has been separately prescribed vide SEBI Circular dated November 22, 2021. The circular was also made applicable to High Value Debt Listed Entities (‘HVDLEs’)[1] vide SEBI Circular dated January 7, 2022.
Read more →FAQs on preferential issue of equity shares and convertible securities under SEBI ICDR
Anushka Vohra, Manager | corplaw@vinodkothari.com
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Maintenance of security cover for secured debt made transparent by SEBI
Debenture trustees responsible for monitoring the security cover and covenants effective October 1, 2022
– Vinita Nair, Senior Partner | corplaw@vinodkothari.com
Background
Securities and Exchange Board of India (‘SEBI’) is carrying out radical changes in relation to monitoring the security cover and covenants with respect to listed debt securities. Recently, SEBI amended SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’) and SEBI (Debenture Trustees) Regulations, 1993 (‘DT Regulations’) and SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (‘NCS Regulations’) in order to substitute the concept of ‘asset cover’ with ‘security cover’ and accordingly, prescribed the requirement of maintenance and reporting of the security cover in case of listed secured debentures[1].
Monitoring of security cover has always been the key responsibility of the DT and therefore, SEBI in November 2020, had prescribed norms for independent due diligence by DTs for the purpose of creation of security[2] and for periodical monitoring of the security created and enhanced disclosures by DTs[3]. Thereafter, in August, 2021[4] SEBI rolled out the norms for security and covenant monitoring using Distributed Ledger Technology (‘DLT’) and in March, 2022 prescribed operational guidelines for security and covenant monitoring wherein system generated unique identifier (Asset ID) will be generated for each security offered by issuer in order to enable the DTs and Credit Rating Agencies (‘CRAs’) for better tracking[5]. Lastly, on August 4, 2022[6] SEBI issued enhanced guidelines for DTs and listed issuer companies on security creation and initial due diligence which inter-alia provides directions to harmonize the process of creation of security.
Read more →Debentureholders’ rights in Intercreditor agreements
Supreme Court lays principles in case of debenture defaults
– Sikha Bansal, Partner, Vinod Kothari & Company | corplaw@vinodkothari.com
A well-developed corporate bond market not only provides cost-effective funds to the issuer, but also enables lenders like banks and other financial institutions to streamline their asset-liability mismatches. As such, there have been a lot of efforts to facilitate the development of the corporate bond market in India. While the market is growing steadily, the size of the market remains small as compared to other emerging markets in Asia[1]. Therefore, India may still have a long way to go.
An important element in ensuring smooth functioning of the bond market is to ensure that there is sufficient clarity on the options, remedies, and rights which the debentureholders have or may have in a given scenario. One such aspect has been dealt with by the Supreme Court (SC) in the recent ruling Securities and Exchange Board of India v. Rajkumar Nagpal and Others[2] (‘SC ruling’). The SC was dealing with the interplay between the RBI’s ‘Prudential Framework for Resolution of Stressed Assets’ issued in June, 2019 (‘RBI Resolution Framework’) and SEBI’s Circular on ‘Standardisation of procedure to be followed by Debenture Trustees in case of ‘Default’ by Issuers of listed debt securities’ (‘SEBI Circular’) and consequent impact of the same on the rights of the debentureholders.
As we see below, the SC ruling is crucial – that it clears the air around the force which SEBI Circular carries and protects dissenting investors from non-statutory compromises. However, most importantly, this SC ruling can be seen as highlighting the problems and gaps which may arise because of segregated rule-making where two regulators were bound by their respective regulatory ambit, thereby leading to a not-so-comprehensive resolution framework.
The author, in this article, has not gone into the facts of the particular case (which, inter alia, necessitated the SC to invoke Article 142 of the Constitution). Instead, the author has deliberated on the key takeaways from the SC ruling.
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