Preferential Allotment of Securities in Unlisted Companies

The Ministry of Corporate Affairs (MCA) has announced draft rules that will, when promulgated, substitute the Unlisted Public Companies (Preferential Allotment) Rules, 2003. This will make the process of issue of securities more stringent for unlisted public companies. The Indian Legal Space blog has a nice comparison of the existing rules and the proposed changes.…


SEBI Reasserts Views on Put and Call Options

In view of the provisions of the Securities Contracts (Regulation) Act, 1956 (SCRA) and notifications issued thereunder, the validity of put and call options on securities of public limited companies entered into outside the stock exchange has been in doubt. In the last year, however, SEBI has been making its stand clearer: such options are…


Restraining the Breach of a Negative Covenant

It is common knowledge that an injunction is granted only if the applicant satisfies the court on the three-pronged test of prima facie case, irreparable injury and balance of convenience. While there is controversy over the scope of some of these elements, notably prima facie case, and over the relationship between these elements, there are…


Restrictions on Redemption of IDRs

On the basis of prevalent regulations, Standard Chartered Bank issued Indian Depository Receipts (IDRs) last year with the offer document stating that IDRs would be convertible into equity shares by way of redemption one year after the issue subject to the approval of the Reserve Bank of India (RBI) on a case-by-case basis. However, one…


Public Financial Institutions under Section 4A of the Companies Act, 1956: MCA Circular

(This post is contributed by Vaibhav Modi) Section 4A of the Companies Act, 1956 (the “Act”) lays down what institutions shall be regarded as public financial institutions for the purposes of the Act. Section 4A(2) empowers the central government to specify other institutions as a public financial institution by a gazetted notification. This sub-section is…