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Tag: sebi

  • Reasons Why SEBI Imposed 25 crore penalty on Mukesh Ambani, Anil Ambani, others

    There was a recent news headlines which said SEBI has slapped INR 25 crore fine on Ambani’s due to the 2000 case over the allegation of violation of the takeover code regulations. Let’s look at the below article to get a clear understanding about the regulation and the reason for imposing the fine.

    Substantial Acquisitions of Shares and Takeovers (SAST) Regulations 1997
    What Happened with the Ambani family?
    Adjudication Order and SEBI
    Fine To be Paid by Ambani Family
    SEBI and Ambani
    FAQ

    Substantial Acquisitions of Shares and Takeovers (SAST) Regulations 1997

    According to the Substantial Acquisitions of Shares and Takeovers (SAST) Regulations 1997, If a company’s promoter group acquires more than 5% of the voting rights in the company, during a financial year. Then the company will have to make an open offer to the minority investors which will give them an option to exit the company if required.

    What Happened with the Ambani family?

    SEBI has fined the Ambani family which include Mukesh Ambani, Nita Ambani, Anil Ambani, Tina Ambani and the various other firms linked to the Ambani group. It is because they have been alleged for violation of the takeover code regulations in 2000.

    The case is because of the increase in the promoter stake of the Reliance Industries Ltd. (RIL) which is during January 2000. The promoter stake in the company was increased after the conversion of various warrants which was issues during 1994.

    In January 2000, the promoter stake of Reliance Industries Ltd (RIL) had increased to 6.83% from the maximum limit of 5% according to SEBI. Securities Exchange Board of India has even alleged that the company or the promoter group had failed to make an offer to the minority investors providing them an opportunity to exit the company.

    SEBI has said that the promoter group of Reliance Industries Ltd had failed to make an open offer as required under the norms issued.

    SEBI has said that in the instant case the violation was not just committed for a particular year or once and for all but it continues till date, that is even now the promoters of Reliance Industries have the majority voting rights in the company.

    Total debt of Reliance Jio Infocomm Limited from financial year 2017 to 2020
    Total debt of Reliance Jio Infocomm Limited 

    List of Major Subsidiaries of Reliance Industries | Reliance Owned Companies
    Reliance Industries Limited is an Indian multinational conglomerate company thatis headquartered in Mumbai, India. Reliance owns businesses across India engagedin energy, petrochemicals, textiles, natural resources, retail, andtelecommunications. Reliance is one of the most profitable and the lar…
    StartupTalkyPV Vyshnavi

    Adjudication Order and SEBI

    In an 85-page adjudication order it was written that the violation of the statutory provisions by which the acquisitions of securities giving the notices that is the Ambani family has provided enhanced control by the exercise of voting rights, etc.

    Which is a disobedience against the regulation and these are violations which are being continued so long as the voting rights are acquired by violating the letter and the spirit of the law.

    SEBI has said that the notices have been alleged because they have been failed to make a public announcement, when they were acquiring more shares of the company to increase the promoter holdings. This has led the other shareholders to be deprived of their statutory rights and opportunity to exit from the target company.

    This has led the promoter group of Reliance Industries Ltd to breach the provisions of Substantial Acquisitions of Shares and Takeovers (SAST) Regulations 1997. All these charges against the notices will make the instant matter grave.

    The SEBI order has said that it has been difficult to ascertain the value of the unfair advantage made by RIL promoter group due to this violation.

    SEBI had said that while determining the amount of penalty they have not found any amount which can be expressed as figures or any data which can be used to record the gain received by the promoter group because of this violation and the amount of loss which has been caused to the minority shareholders in the company as a result of the default that was committed.

    Mukesh Ambani’s Reliance Industries is offering to sell a roughly $20 billion stake to Amazon.com
    Indian billionaire Mukesh Ambani’s Reliance Industries Ltd. is offering to sella roughly $20 billion stake in its retail business to Amazon.com Inc., accordingto a person with knowledge of the matter. Mukesh Ambani, which has alreadyraised $20 billion in this year from investors including Faceboo…
    StartupTalkyArbaz Sayed

    Fine To be Paid by Ambani Family

    Under Section 15H of the SEBI Act which was amended in October 2002, a maximum penalty of INR 25 crore or three times the number of profits made out of the failure is allowed.

    The Regulator has said that the penalty of INR 25 crore will have to be paid together by the 34 individuals who are named in the SEBI order which includes the mother of Mukesh Ambani and Anil Ambani and even the children of Mukesh Ambani and Anil Ambani. The amount is said to be paid within 45 days.

    SEBI and Ambani

    In November 2020, in reply to the regulator SEBI said the Ambani family that the issue of warrants and the issue of shares on conversion of warrants were not to subject to SEBI’s Substantial Acquisitions of Shares and Takeovers (SAST) Regulations 1997.

    The Reliance promoter group had responded to SEBI saying that the initiation of the adjudication proceedings in the particular case with a large misappropriate delay was unreasonable, arbitrary and causes substantial prejudice to the notices.

    FAQ

    What is the number of Mukesh Ambani in world richest person?

    Reliance Industries (RIL) Chairman Mukesh Ambani is the eighth richest person in the world with a fortune of $83 billion, according to the Hurun Global Rich List 2021.

    Who is the CEO of Jio?

    Atul Kansal is the current CEO of Jio.

    How much did Ambani earn in lockdown?

    According to the Oxfam report, Ambani earned Rs 90 crore per hour during the coronavirus pandemic.

    Conclusion

    The market regulator had issued the show cause notices (SCN) regarding this matter in February 2011. That is almost 11 years after the allegation of violation.

  • Indian Startups May Soon Start Listing Overseas

    Indian startups may become the new eye candy for foreign investors as RBI and SEBI come together allowing them to enlist themselves in foreign jurisdiction. The tech ecosystem is flourishing at a steady pace in India. This pace might get some acceleration if Indian startups decide to approach funding by enlisting themselves outside India.

    However, until recently, SEBI, the stock market watchdog, had certain compliances which made listing on foreign exchanges a troublesome task.

    Under the current rules, Indian companies are allowed to issue only specific currencies such as depository receipts on foreign stock exchanges- that too only if you are a company enlisted in India. This is about to change as the government along with SEBI and RBI has now allowed Indian conglomerates to enlist themselves abroad.

    What are the Changes Made by the Government
    Companies that are Seeking Foreign Stock Exchanges
    Benefits of Listing On Foreign Stock Exchanges
    Key benefits of listing Overseas
    Creating a Brand Presence
    Native Concerns
    FAQ

    What are the Changes Made by the Government

    In the Companies (Amendment) bill 2020 passed by Rajya Sabha in September last year, it seeks to amend Sec 23 of Companies Act 2013, which prescribes the manner in which private and public companies may issue securities.

    Earlier, the companies who preferred enlisting themselves on foreign stock exchanges were compelled to do so with several restrictions laid out by SEBI. With the amendment coming into force, not only existing Indian companies but newbies too can enlist themselves under foreign stock exchanges. The center along with SEBI and RBI are working on a framework to bring this into practice.

    PepsiCo Subsidiaries – List of Everything that PepsiCo Owns
    People all around the world know about Pepsi, its products are enjoyed over onebillion times just in a day by its consumers. PepsiCo Inc[/pepsico-success-story/] is an American multinational company thatmanufactures, markets and distributes various snacks, food and beverages.PepsiCois also known…
    StartupTalkyPV Vyshnavi

    Companies that are Seeking Foreign Stock Exchanges

    Infosys, the Indian tech giant became the first company to get listed on a foreign stock exchange when it enlisted itself on  NASDAQ (National Association of Securities Dealers Automated Quotations) on March 11, 1999. Post Infosys, a number of Indian companies decided to join the league including ICICI, HDFC Bank, Wipro and travel tech company MakeMyTrip.com.

    Along with NASDAQ, there are other exchanges overseas that are trying to grab the attention of Indian companies. Amongst the top ones are NYSE, Tokyo Stock Exchange, London Stock Exchange who are trying to meet Indian firms and lure them into enlisting themselves on these platforms.

    India has more than 30 unicorns such as OLA, Byju’s, Swiggy and Paytm who could be beneficiaries of this government initiative. While this is being applauded and celebrated, UK based Bay Capital announces Pre IPO investment in India’s largest insurance aggregator, PolicyBazar.com.

    Siddharth Mehta, founder and chief information officer of Bay Capital, said, “We are excited to partner with the excellent management team of PB Fintech, which is transforming the way insurance is bought in India. Customer centricity has been the heart of their proposition and has helped them become the platform of choice for customers.”

    Highest Valued Startups in India 2020
    Highest Valued Startups in India 2020

    Reasons Why These Startup Sectors Bloomed During Lockdown
    In the unprecedented time, where everyone is talking about the economic slowdownand financial difficulties, there have been a few startups sectors that havemanaged grow exponentially well. The covid 19 has shaken the world and hasbrought many business to a halt, although startups have lost their …
    StartupTalkyPV Vyshnavi

    Benefits of Listing On Foreign Stock Exchanges

    Indian startup ecosystem has now been exposed to a vast capital market which was in oblivion before the announcement. Of course, there are companies who have taken the road to foreign stock exchanges but notably it took Indian companies 30 long years to finally go abroad.

    SEBI has been a tenacious watchdog and companies have struggled to move out of their regional boundaries. With the changes prompted by the center, Indian companies, especially startups are doing the happy dance since a vast capital market has been exposed to them.

    Key benefits of listing Overseas

    Wider Investor base

    Listing overseas will expose Indian companies to a larger pool of investors broadening their investor base.

    Soared  Valuations

    More investors along with an understanding of global influence, raised cap for funding.

    List of Major Subsidiaries of Reliance Industries | Reliance Owned Companies
    Reliance Industries Limited is an Indian multinational conglomerate company thatis headquartered in Mumbai, India. Reliance owns businesses across India engagedin energy, petrochemicals, textiles, natural resources, retail, andtelecommunications. Reliance is one of the most profitable and the lar…
    StartupTalkyPV Vyshnavi

    Creating a Brand Presence

    Overseas listing has put companies like Wipro, HDFC Bank, ICICI on the global map and will do the same for companies that are considering this move. No pros for any decision exist without their cons. Economic experts fear that Indian companies may face tax complications in a market regulated by foreign law makers. Dual listing may bring concerns over co-existing in foreign waters and on the home ground.

    Native Concerns

    Internet entrepreneur Sanjeev Bikhchandani says an estimated Rs 17 trillion of market cap has been transferred abroad after young Indian Startups were forced to shift their company domicile overseas by foreign investors promising the funds they need for growth.


    There is a fear shared by many economic well wishers that listing overseas would be giving up a part of the ecosystem which is full of potential and may drive the aspiring Indian entrepreneur away from his/her roots.

    FAQ

    Which country has the most number of Startups?

    United states is the country which has the most number of Startups.

    Can Indian companies list overseas?

    Ministry of Finance, Government of India announced that Indian companies would now be allowed to list their shares directly in foreign stock exchanges.

    Is dual listing allowed in India?

    The Indian government has decided not to mandate secondary listing for domestic firms which choose to list on overseas stock exchanges.

    Conclusion

    Indian ecosystem is a hidden treasure which is about to get explored by the global market. Several startups have been meaning to raise funds through ICOs (Initial Coin Offering) which is through crypto funding.

    Apparently, we are running out of investors in India and foreign involvement is seeking an approval at large. While this may be a great opportunity for upcoming companies, there will always be dismay of profits  flowing out of the country.

    Listing overseas calls upon a bundle of opportunities for Indian companies to have a global footprint. It not only will enable India to aspire for a spot in the global marketplace but also will take Indian ecosystem towards becoming a global superpower.

  • SEBI Likely to Ease the Startup Listing Process

    Capital markets regulator the Securities and Exchange Board of India (SEBI) is considering accommodate various flexible proposals to moderate the listing of startups in the stock exchanges in the country. This will encourage domestic startups to go public.

    Institutional Trading Platform(ITP) was put in place for amendments to SEBI Regulations in August 2015. As the framework failed to gain interest, the discussion paper was put in place to enhance interest amongst startups in July 2016 . However, due to loose market interest, amendment to the ICDR Regulations was not made.

    In June 2018, SEBI formed a group with stakeholders to review ITP framework and identify areas which require further changes. Yet, the threshold norms for getting securities or shares listed was still very high. Thus, under normal condition for startup companies to list their securities was remotely achievable. Yet, the ITP did not gain the buzz it was expected when it was launched.

    Considering this and potential of startups, on December 12, 2018, SEBI in its board meeting cleared the proposition for providing easy listing norms in cases of startups which are into intensive use of technology, information technology, intellectual property, data analytics, biotechnology, nano-technology and which add value to the product and services.

    If this supposed move is implemented, it would facilitate entrepreneurs to class themselves as ordinary shareholders and relieve them of the mandatory three-year lock-in clause.  

    Also Read: Common Problems Entrepreneurs Face and The Truth About Startup Life

    Also, if a Private equity firm is being reviewed as promoters of a company, eventually it will pull in a lot of fiduciary responsibilities and disclosure requirements. Besides, they will also be subjected to SEBI’s insider trading rules. Hence, the market controller might consider exempting promoters of their fiduciary responsibilities and permitting PE backers enough stakes in a firm to release them as promoters.

    Due to the rigid IPO rules like one year locked in for pre-IPO investors after listing, three years of lock in period of 20% of promoters’ shares and requirement of onerous consideration for delisting itself as a promoter, Indian startups take the acquisition path for its departure.

    Sandeep Parekh, founder, Finsec Law Advisors commenting on the possible amend said

    Relaxing the promoter reclassification norms would be a move in the right direction as it would provide more flexibility to startups planning to list. These companies operate with completely different business models and hence need more lenient regulations. In order to mitigate risk of lenient regulations, the regulator could keep trading in these companies confined to wealthy investors and institutions.

    Earlier this year, National Stock Exchange (NSE) was reportedly in a dialogue with SEBI to relax startup listing norms on its platform Emerge ITP, a regulated platform connecting growing ventures with potential investors with or without IPO.

    Also Read: How Different Sectors will Resume their Operations after Lockdown?

    Additionally, in a bid to bolster angel funding in the home grown startups,the SEBI board has approved the modification of the Alternative Investment Fund (AIF) for doubling the maximum investment limit.