Amit Sahita’s Post

Brief details: Appeal at Apex court The appellant-Jyoti Limited applied for listing of certain equity shares to the Bombay Stock Exchange whihc was declined stating "appellant had not taken in principle approval from the Stock Exchange and that the appellant had not even taken the approval of the shareholders for the allotment of the shares to the Asset Reconstruction Private Limited" The above order of the BSE rejecting the application of the appellant for the listing of shares was upheld and confirmed by the Securities Appellate Tribunal Grounds; Section 9(1) of SARFEASI Act 2002, permits RARE to take measures such as conversion of any portion of debt into shares of the borrower company. The appellant company had not proposed to increase the subscribed capital rather it is RARE that has done it, no approval of shareholders is necessary. Facts: Here it is evident that the appellant company had entered into discussion with RARE and it was agreed upon between the parties to convert part of its outstanding debts of Rs.32.80 Crore into equity shares.Resolution passed by BOD was not endorsed by shareholders of the company.application to lsit the shares was by Appellant Company and not by RARE. Accordingly, as contemplated by Section 62(1)(c) of the Companies Act, 2013, the approval of the shareholders would be mandatory before the shares are accepted for listing on the BSE. Finding of SAT that the approval of the BSE is necessary in view of Regulation 28 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is clear and we do not have a different opinion. Special resolution of the shareholders is necessary which is lacking in the instant case. This statutory appeal under Section 22 F of Securities Contracts (Regulation) Act, 1956 is devoid of merit and is dismissed.

Bought shares of Reliance Industries Limited but did not claim dividends given on those shares for FY 2015-16 or before? Then you should go to Reliance's website and check. If you don't claim these dividends on or before August 26, 2024 they will be transferred to Investor Education and Protection Fund (IEPF). Vinita Sahitya shares her experience in regard to why shares may get transferred to IEPF Authority. "Dividend from shares usually comes directly into the bank account of the shareholder. However, if the bank account is not active for some reason like freeze, lapse of KYC, and other non-compliances, then the dividend may not get credited resulting in the commencement of the countdown of seven consecutive years or more," she says. Vinita Sahitya also told me about a case where the family members of a deceased shareholder did not claim the dividend on shares, as they were not even aware of such investment in shares by the deceased shareholder. This case highlights the importance of telling one's family members about their investments. Ministry Of Corporate Affairs Savithri Parekh The Institute of Company Secretaries of India LexFulcrum, Advocates and Solicitors   #ril #shares #mca #iepf #reliance #law #legal https://lnkd.in/g_Vpvihp

The Hon’ble Supreme Court of India, in Jyoti Limited v. BSE & Anr., upheld the rejection of Jyoti Limited’s application for listing equity shares on the Bombay Stock Exchange (BSE), citing non-compliance with shareholder and regulatory approval requirements. This judgment reinforces the importance of corporate governance and adherence to legal norms in financial operations. Key Legal Issues and Court Findings 1. Mandatory Shareholder Approval Under Section 62(1)(c) of the Companies Act, 2013, shareholder approval via a special resolution is required for increasing subscribed share capital, even in debt-to-equity conversions. The Court rejected Jyoti Limited’s argument that approval was unnecessary since RARE initiated the conversion. Regardless of initiation, companies must comply with shareholder approval requirements. 2. Stock Exchange Approval The Court upheld Regulation 28 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which mandates prior approval from stock exchanges for listing additional shares. Jyoti Limited’s failure to comply led to BSE rejecting the application. Judgment Highlights and Implications The Supreme Court dismissed Jyoti Limited’s appeal, emphasizing: a. Mandatory Shareholder Consent: Shareholder democracy is central to corporate governance, and a special resolution is non-negotiable. b. Regulatory Compliance: Adhering to SEBI and stock exchange regulations is critical for ensuring smooth market operations. Key Lessons for Companies 1. Governance and Compliance: Companies must respect shareholder rights and statutory mandates in any capital restructuring exercise. 2. Regulatory Preparedness: SEBI norms and stock exchange regulations must be diligently followed to avoid listing disruptions. 3. Integrated Approach: Boards must balance internal governance (shareholder approvals) with external compliance to minimize legal and procedural risks. This judgment serves as a reminder that corporate governance and regulatory adherence are inseparable in maintaining financial market integrity. Let’s Discuss: How can boards strengthen governance to avoid similar pitfalls? #CorporateGovernance #SEBIRegulations #SupremeCourt #LegalInsights #FinancialRestructuring

I extend my gratitude to CDSL - Central Depository Services India Ltd for efficiently processing all our #ISIN applications for unlisted private company shares under Rule 9B (Equity/Preference etc) filed between July and September. A special thanks to our #RTA for their prompt support in ensuring hassle-free ISIN generation. We at the Compliance Calendar ® have successfully obtained 50 + ISINs including foreign Subsidiary company, with 100+ applications currently in progress, pending RTA payments or tripartite agreement execution. 𝙄𝙩’𝙨 𝙫𝙚𝙧𝙮 𝙞𝙢𝙥𝙤𝙧𝙩𝙖𝙣𝙩 𝙛𝙤𝙧 𝙥𝙧𝙤𝙛𝙚𝙨𝙨𝙞𝙤𝙣𝙖𝙡𝙨 𝙩𝙤 𝙘𝙝𝙤𝙤𝙨𝙚 𝙖 𝙧𝙚𝙡𝙞𝙖𝙗𝙡𝙚 𝙍𝙏𝘼 𝙧𝙖𝙩𝙝𝙚𝙧 𝙩𝙝𝙖𝙣 𝙤𝙥𝙩𝙞𝙣𝙜 𝙛𝙤𝙧 𝙛𝙧𝙚𝙚 𝙨𝙚𝙧𝙫𝙞𝙘𝙚𝙨 𝙩𝙝𝙖𝙩 𝙤𝙛𝙩𝙚𝙣 𝙛𝙖𝙞𝙡 𝙩𝙤 𝙙𝙚𝙡𝙞𝙫𝙚𝙧 ❗ RTA only plays a major role in the ISIN process, and poor service can lead to significant issues despite your compliance efforts. If you're facing challenges with your RTA, consider switching for better service instead of struggling with coordination issues. Depositories like #CDSL and #NSDL perform well when supported by competent RTAs. For assistance, feel free to reach out to me [email protected] with your questions or query. Gaurav Kumar Khushi Jindal Geetika Jain Sohil Choudhary Damini Kumari Karan Singh Shanu Kumari Learn here what is the process of getting ISIN for an unlisted private company under Rule 9B? https://lnkd.in/gfgCDetE #ISIN #DEMAT #CDSL #RTA #NSDL #DP #subsidiary #company #wos #shares #dematprocess #equity #preference #online #advisory #depository #rule9b #companylaw #companiesact2013

𝐃𝐨 𝐲𝐨𝐮 own 𝐝𝐨𝐜𝐮𝐦𝐞𝐧𝐭 𝐰𝐡𝐢𝐜𝐡 𝐬𝐚𝐲𝐬 ‘𝐬𝐡𝐚𝐫𝐞𝐬 𝐨𝐟 𝐜𝐨𝐦𝐩𝐚𝐧𝐲 𝐰𝐞𝐫𝐞 𝐛𝐨𝐮𝐠𝐡𝐭 𝐛𝐲 𝐬𝐨𝐦𝐞𝐨𝐧𝐞 𝐢𝐧 𝐲𝐨𝐮𝐫 𝐟𝐚𝐦𝐢𝐥𝐲’ 𝐛𝐮𝐭 𝐛𝐞𝐲𝐨𝐧𝐝 𝐭𝐡𝐚𝐭 𝐲𝐨𝐮 𝐤𝐧𝐨𝐰 𝐧𝐨𝐭𝐡𝐢𝐧𝐠 𝐚𝐛𝐨𝐮𝐭 𝐭𝐡𝐞𝐦!!! Shares which have not been claimed or dividend remains unpaid for seven consecutive years are transferred to IEPF . This fund is managed by Ministry of Corporate Affairs , Government of India . You need following documents to start the process . • Copy of the acknowledgement generated on online submission of e-Form IEPF - 5 bearing a unique serial number (SRN), • Indemnity Bond (original) with claimant signature, • Advance stamped receipt (original) with revenue stamp and signature of claimant and witnesses, • Original matured deposit / debenture / share certificate (only in case of securities held in physical form) or copy of transaction statement in case of securities held in demat . • Self-attested copy of Aadhaar card, • Proof of entitlement (certificate of share/Interest warrant application no. etc.). • A professional who can help you with the process . There is a dedicated website for the assistance : https://www.iepf.gov.in Happy Leaning !!

There was a recent stir in India's capital markets as a US-based short seller leveled serious allegations pertaining to #ConflictofInterest against the top brass of our regulatory body ie Securities and Exchange Board of India (SEBI) Are #VC Firms free of from this glare ? Not really The gravity of this situation highlights a chilling potential for a #ConflictofInterest that could cast #Founding Partners and "Members of the IC/ Key Persons" into a damaging spotlight in the following scenario : ✳️ Selective Share Acquisition : Founding Partner purchases shares in "cherry-picked" folio company that is at an advanced stage of revenue, profitability and, a risk profile that is << rest of folio where Fund Investors ie #LPs are invested e.g. the company may be at Series C while balance folio is mostly at pre A/ A or even written off due to a large governance lapse ✳️ Personal or Related Party Purchases : Make the purchase in their own names or that of #relatedparties, clearly for personal gain ✳️ Insider Markups : They buy shares with insider knowledge of a say 3x fund raise, anticipating substantial markups that only they benefit from ✳️Exclusion of LPs : The Fund doesn't purchase any shares and LPs lose out on the capital gains ✳️ Lack of Disclosure : There's no transparency or consent sought from #LPs ✳️ Coercion Tactics : Pressure is applied on key personnel, IC Members, or even #founders of portfolio companies to facilitate these transactions What would this lead to ? Regulation #24 of #AIF Regulations 2012 outlines the obligations and procedures related to managing #Conflictofinterest It states : ✅ Disclosure of Conflicts: The investment manager and other key personnel must disclose any conflicts of interest to the AIF and its investors. This includes any potential conflicts arising from personal interests, business interests, or financial arrangements This puts the onus on all "Key Persons/ IC Members" & Chief Compliance Officer, legal team that enabled such a transaction, to come forward and inform #LPs and Securities and Exchange Board of India (SEBI) if they have been a party to this Else, it creates an immediate co-liability that may hurt careers and ability to operate in capital markets, when called into question from a prospective / existing #LP or even an internal #whistleblower For #LPs esp from Government of India Official handling tax payer monies, I would recommend a simple question to be asked as part of #Duediligence to uncover such a violation : ✅ Did any member of the IC/ Key persons/ Designated partner of the VC firm purchase any shares of any folio company under their name or their related parties, without making a full disclosure to #LPs OR without offering the same opportunity to the Fund OR without taking permission from #LPs ? Hope this is useful to those in #VCcareers and to prospective LPs ( Useful links in comments) #Governance #transparency #EnhanceDuediligence

📊 The Reality of Share Refunds in India Out of 95,269 applications for share refunds with IEPF in the last 5 years: ✅ Only 35.48% were refunded. ❌ 24.41% were rejected. ⏳ A staggering 40.37% remain pending—more than the total refunds approved! To make matters worse, the overall success rate for shareholders initiating the process is less than 1% due to hurdles like obtaining Entitlement Letters from RTAs. This system needs a complete transformation—one that prioritizes shareholder rights over institutional inefficiencies. At Seriate Capital, we’re committed to driving awareness and advocating for better processes. 💡 Let’s collaborate for change! Explore more at www.seriatecapital.com. #ShareholderRights #IEPF #CorporateTransparency #SeriateCapital

The Securities and Exchange Board of India (SEBI) recently conducted a study revealing that some publicly listed companies in India have been paying over 20% of their net profits in royalties to related parties. This trend raises concerns because high royalty payments to related parties—such as parent companies, subsidiaries, or affiliated firms—can affect a company’s profit margins, potentially diminishing returns to shareholders. Here’s a closer look at the implications and SEBI's findings: 1. Profit Drain and Shareholder Impact: Royalties paid to related parties directly reduce the net profits available for distribution to shareholders. When payments exceed 20% of net profits, it raises questions about whether these payments are justifiable or if they are excessive, benefiting related parties at the expense of shareholders. 2. Governance Concerns: Related-party transactions (RPTs) are often scrutinized in corporate governance as they can open the door to conflicts of interest and potential misuse of funds. High royalties paid to related parties might indicate that companies are transferring wealth to parent or affiliated firms, which could raise transparency issues and reduce shareholder trust. 3. Scrutiny for Misuse or Justification: SEBI’s study likely aims to ensure that these royalty payments are not being used to shift profits out of India, to avoid taxes, or to unjustifiably benefit controlling entities. It highlights SEBI’s intention to encourage fair and transparent practices in listed companies. 4. Potential Regulatory Response: Based on this study, SEBI might consider strengthening its regulations around royalty payments, possibly introducing thresholds or requiring greater justification for high royalty payouts to related parties. For shareholders and investors, the findings emphasize the importance of scrutinizing a company’s related-party transactions and understanding how royalties and other RPTs impact overall profitability and governance integrity.

Promoter's shareholding inflation refers to the practice where promoters of a company artificially inflate their shareholding to maintain control or manipulate stock prices. This issue has garnered significant attention in India, especially with high-profile cases involving major corporations. In India, the Securities Contracts (Regulation) Rules, 1957, mandate that at least 25% of a listed company's shares must be held by the public. This rule ensures sufficient free float in the market, allowing for accurate price discovery and preventing market manipulation. Promoters and their immediate family, along with subsidiaries or associates, are excluded from this public shareholding requirement. One of the most notable cases of alleged promoter shareholding inflation involves the Adani Group. Investigations by the Organized Crime and Corruption Reporting Project (OCCRP) revealed that Mauritius-based funds, controlled by individuals linked to the Adani family, were used to buy and sell large volumes of Adani stocks. This practice allegedly allowed the Adani Group to maintain a promoter shareholding above the 75% threshold, in violation of SEBI regulations. Similarly, the case of Patanjali Foods highlights the consequences of failing to meet public shareholding norms. The company's promoter shareholding was frozen by stock exchanges after it failed to dilute its promoter stake to meet the 25% public shareholding requirement. The Securities and Exchange Board of India (SEBI) has been proactive in addressing issues related to promoter shareholding. SEBI's regulations require detailed disclosures of promoter holdings and any changes therein. Additionally, SEBI has proposed shifting the regulatory focus from "promoters" to "persons in control" to better capture the evolving corporate ownership structures, especially in companies with significant institutional investor presence. However, enforcing these regulations has been challenging. The Adani case, for instance, underscores the difficulties in tracking beneficial ownership through complex offshore structures. Despite SEBI's efforts, the use of proxy investors and opaque investment vehicles continues to pose significant regulatory hurdles. Promoter shareholding inflation can lead to severe legal consequences, including delisting from stock exchanges, freezing of promoter shares, and hefty fines. SEBI has the authority to investigate and penalize companies and individuals involved in fraudulent practices under the SEBI Act, 1992. Moreover, the introduction of class-action suits in India has empowered minority shareholders to seek redressal against corporate malpractices. For instance, the class-action suit against Jindal Poly Films Ltd. by its minority shareholders alleges significant financial losses due to related-party transactions orchestrated by the promoters.