UK and EU share buybacks fall under MAR rules

Hi, Let’s talk about the instruments that are used to determine the Significant Beneficial Ownership. While determining the Significant Beneficial Ownership (SBO), the following instruments are included: - (i). Global depository receipts; (ii).  Compulsorily convertible Preference shares; (iii). Compulsorily convertible Debentures. Above shall be treated as shares in accordance with SBO Rules Explanation II to Rule 2(e). It is appropriate to interpret the reference to shares in this section as equity shares because compulsorily convertible Debentures and compulsorily convertible Preference shares have been viewed as securities similar to equity. The percentage used to calculate shares: - ·       Using an arithmetic basis; ·       Determining the percentage or using a diluted basis depending on the value of each security. Important to note: - The Shares are to be considered only at the level one, i.e., Shares of the Reporting Company as for understanding the majority stakes going up requires a majority of equity shares. “Reporting company” means a company as defined in clause (20) of section 2 of the Act, required to comply with the requirements of Section 90 of the Act. "Majority stake": -  i.  Holding more than one-half of the equity share capital in the body corporate; or ii.  Holding more than one-half of the voting rights in the body corporate; or iii. Having the right to receive or participate in more than one-half of the distributable dividend or any other distribution by the body corporate; Hope you found the article useful. #SBO #SignificantBeneficialOwnership #Instruments #SBOrules #majoritystakes

Imagine being a shareholder in a company and wanting to transfer your shares—maybe to a family member or a buyer. But when you try, you discover you can’t. Why? . . . . . Because your company hasn’t obtained an ISIN or dematerialized its shares. Yes right, Without ISIN compliance, companies shareholders aren’t eligible for share transfers, leaving shareholders stuck with physical shares that can’t be moved or sold. Therefore, If your company hasn’t completed the ISIN/Demat process yet, start now. It’s a simple step to ensure your shares remain transferable and compliant with the law. The due date for ISIN/Demat compliance has already passed on September 30, 2024.After 30th September now allotment of securities and share transfer are prohibited in a physical manner. Which company is required to get this ISIN under Rule 9B which is introduced for private companies ? ✔️Section 8 NGOs limited by shares irrespective of capital and turnover ✔️Wholly Owned Subsidiaries (WOS) or Subsidiary Companies ✔️Holding Companies ✔️Companies with a paid-up capital exceeding ₹4 crores ✔️Companies with a turnover exceeding ₹40 crores To know more about the basic requirements, timeline, process and fees, here to go https://lnkd.in/gzvjUvVR #ISIN #DEMAT #securites #physicalshares #certificates #shares #sharecertificate #rta #cdsl #nsdl #rta #dp #conversion #process #transferofshare #online #process #compliance #mca #businessadvisory #compliancecalendar #holding #subsidiary #section8 #otherthansmallconpany #companiesact Compliance Calendar ® served more than 100+ clients in getting their ISIN hassle-free. DM for any query or help needed at [email protected]

NSE Releases BRSR FAQs and Observations! The National Stock Exchange (NSE) released a helpful document on May 10th, 2024, addressing company secretaries of listed companies. This resource aims to improve Business Responsibility and Sustainability Report (BRSR) disclosures. What's Included? Part 1: Addressing Common Concerns: This section tackles Frequently Asked Questions (FAQs) regarding BRSR disclosures. It provides much-needed clarity on issues you might encounter when preparing your reports. Additionally, it also includes helpful resources and links for further reference. Part 2: Enhancing Disclosures for Investors: The NSE shares general errors, observations and best practices for BRSR reporting. This section focuses on what information companies should disclose under Sections A, B, and C of the BRSR framework.  https://lnkd.in/gDGQrbQy

The trade life cycle (TLC) of a stock buyback (share repurchase) involves a set of steps tailored to this specific corporate action. A stock buyback differs from a regular trade because it is initiated by the issuing company to repurchase its shares from the market or shareholders. Announcement: The company announces its intention to buy back shares, including details such as the buyback price, the number of shares to be repurchased, and the buyback period. Approval: The company's board of directors and shareholders approve the buyback plan. Regulatory Compliance: The company ensures compliance with regulatory requirements and obtains necessary approvals from relevant authorities. Open Market Purchase: The company starts purchasing its shares from the open market. This can be done through brokers or directly from shareholders. Record Date: The company sets a record date to determine which shareholders are eligible to participate in the buyback. Entitlement Calculation: The company calculates the entitlement of each eligible shareholder based on the number of shares held. Notification: Shareholders are notified of their entitlements, and the information is sent to the custodian banks or brokers. Trade Reconciliation: The custodian banks or brokers reconcile the entitlements with their records to ensure accuracy. Payment Processing: The company processes the payments to the shareholders for the repurchased shares. Crediting to Shareholder Accounts: The custodian banks or brokers credit the payments to the shareholders' accounts. Reporting and Confirmation: The company reports the completion of the buyback to the relevant authorities, and the custodian banks or brokers confirm receipt of the payments to the shareholders. Post-Processing: Any discrepancies or issues are resolved, and final confirmations are sent to all parties involved.

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.

The Man Who Knew Too Much: The case of the CEO who bought shares when he shouldn't In a recent ruling of the Finnish Supreme Court, a former CEO of a listed company was sentenced to conditional imprisonment for aggravated misuse of inside information. The Supreme Court found that the CEO had been aware of ongoing negotiations about a large customer order when buying shares of the company from the market, and established that, as the CEO of the company, he must have understood the financial significance of the customer order and its relevance for investors and to the company's share value. The core of the Supreme Court's ruling lies in its reasoning about when information is of a sufficiently precise nature so as to constitute inside information. The Supreme Court rejected the CEO's argument that the outcome of the negotiations still was uncertain at the time when he bought the shares, and ruled that the information about the prospective customer order clearly was of a precise nature because there was a reasonable expectation that the negotiations would be successful. The Supreme Court further dismissed the CEO's defences that negotiations about customer orders belonged to the company's day-to-day operations and that it was the policy of the company not to treat such negotiations as inside information or that he had sought advice from the company's inhouse counsel before he bought the shares. - It is the responsibility of the person who trades in shares on the securities market to make sure that such trading is not prohibited because of inside information, the Supreme Court established. This case underscores the importance of listed companies to have clear and comprehensive, up-to date disclosure policies and trading restrictions so as to provide reliable guidance to their executives and directors, and touches upon a critical question of whether there ever is a level playing field when corporate executives trade in shares of the company they work for. Where also day-to-day customer negotiations may fall within the scope of inside information, it is increasingly difficult to draw the line. The lessons from this case should inspire all executives to act with the highest standards of integrity and diligence, ensuring that their actions always align with both legal requirements and ethical principles. For more insights on this case, check out my blog: https://lnkd.in/d_ubgbm #insideinformation #marketabuse #finnishlaw #securitieslaw #wistattorneys

In a very recent case, the Supreme Court observed that approval of shareholders is mandatory for listing shares on Stock Exchange : https://lnkd.in/eFKU7g6a In this case, the Listed company converted its loans into equity shares u/s 62(1)(c) of Cos. Act read with SEBI ICDR Regs. BSE raised a query:- Shareholders approval was not obtained and that shares are being listed only on the approval of board of directors. On appeal, SAT upheld the decision of BSE. The Supreme Court upheld the decision of the BSE and SAT. Fundamental question is whether such offer and issue of equity shares should fall under section 62(1)(c) of the Companies Act OR section 62(3) of the Companies Act? Section 62(1)(c) states that: Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered- (c) to any persons, if it is authorised by a special resolution, whether or not those persons include the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer subject to the compliance with the applicable provisions of Chapter III and any other conditions as may be prescribed. Section 62(3) states that : Nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company: Provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a special resolution passed by the company in general meeting.

Many directors believe they have an absolute right to monies deposited in a company's bank accounts. However, payment cannot just be withdrawn as there are procedures to follow to be legally compliant. 💸 'Illegal' dividend 👉 A dividend is a distribution of post-tax profits, and it can only be paid if the company has sufficient retained profits from which to make payment. Therefore, before declaring a dividend, it is necessary to check this. If a dividend is paid without a sufficient amount of profit to substantiate the payment, this effectively means that the company is insolvent and considered to be breaking (company) law. 💰 Preferences 👉 Where a dividend payment has been made out of retained profits, there may be instances where a shareholder would prefer not to receive payment of all or part of the dividend or would be tax-advantageous for that particular shareholder not to do so. Feel free to contact us for further information about this subject: 01905921333 or drop us an email-: at [email protected] #takingadividend #shareholder #waivingdividendsrules

SEBI: STREAMLINES BUY-BACK REGULATIONS, TIGHTENS DISCLOSURE REQUIREMENTS TO STRENGTHEN TRANSPARENCY   SEBI amends Buy-Backof Securities Regulations, 2018 further, to enhance transparency, strengthen disclosure requirements and refine processes related to buy-back transactions; Inter alia dds a proviso to Reg. 4, stating that if a promoter or a member of the promoter group decides not to participate in the buy-back, their shares will not be included when calculating the “entitlement ratio” which determines the number of shares each eligible shareholder can tender in a buy-back; In Reg. 17, SEBI replaces the term "record date" with "date of public announcement", clarifying the relevant date for determining shareholder eligibility for buy-back participation; Regulator introduces an exception to Reg. 24, allowing buy-backs to fulfill existing obligations related to warrants, stock options, sweat equity and the conversion of preference shares or debentures into equity shares and also mandates that the public announcement discloses the details and potential impact of these subsisting obligations; SEBI also introduces new disclosure requirements across various schedules, which include – mandating disclosing relevant details and potential impact of existing obligations in Schedule II, the entitlement ratio for small and general shareholders and the website link of the Registrar and Share Transfer Agent in Schedule III and further details about subsisting obligations in Schedule IV.

Supreme Court Ruling: Shareholders' Approval Mandatory for Listing of Additional Shares Case: Jyoti Limited vs. BSE Limited & Anr Court: Supreme Court of India Civil Appeal No.: 4707 of 2022 Citation: 2024 INSC 992 In a significant decision, the Supreme Court has upheld the requirement for shareholder approval before equity shares can be listed on a stock exchange. Background: Jyoti Limited, the appellant, applied to list certain equity shares on the Bombay Stock Exchange (BSE). However, the application was rejected as the company failed to obtain: In-principle approval from BSE. Shareholder approval for the allotment of shares to Asset Reconstruction Private Limited (RARE). This rejection was upheld by the Securities Appellate Tribunal, prompting the appellant to approach the Supreme Court. Supreme Court’s Observations: Mandatory Shareholder Approval: The Court emphasized that the conversion of debt into equity shares was initiated by Jyoti Limited through an agreement with RARE. A resolution dated May 2, 2018, by the Board of Directors of Jyoti Limited approved this conversion, increasing the company’s equity capital. Section 62(1)(c) of the Companies Act, 2013 mandates shareholder approval via a special resolution for such actions. The absence of this approval rendered the application non-compliant. Approval from BSE: The Court concurred with the Securities Appellate Tribunal's findings that approval from BSE was essential under Regulation 28 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Ruling: The Apex Court affirmed the decisions of BSE and the Securities Appellate Tribunal, holding that the application for listing lacked compliance with both statutory and regulatory requirements. Key Takeaway: This judgment reinforces the importance of adhering to corporate governance norms and shareholder rights, particularly under Section 62(1)(c) of the Companies Act, 2013. Shareholder approval is a cornerstone for actions impacting equity structure, and regulatory approvals remain non-negotiable. #CorporateGovernance #SupremeCourt #SEBI #CompaniesAct #ShareholdersRights