Identification of Promoters

Regulatory Spotlight on Identification of Promoters

Identification of “promoters” ahead of an initial public offering in India is a critical step given the resultant disclosure requirements, obligations and other implications. In the recent past, the Indian securities regulators have increased their scrutiny over the persons and entities being identified as promoters in offer documents.
This note provides an overview of certain recent developments in connection with the identification of promoters.


Short Selling in India

Short Selling in India

Short selling in India has been in the spotlight as highlighted by the events triggered by the publication of a report by Hindenburg Research in 2023 (the “Hindenburg Report”). The Indian Supreme Court considered short selling pursuant to petitions filed following the publication of the Hindenburg Report. This was followed by SEBI reissuing its framework for short selling.


REITs and InvITs

REITs and InvITs: Evolution of the Regulatory Landscape in India

Business trusts play a significant role in Asian and global capital markets. India introduced real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) in 2014. As the regulatory regime approaches the completion of a decade, this note reflects on the evolution of the regulatory landscape for REITs and InvITs in India.


India's Satellite Communication

Regulatory Shifts in India’s Satellite Communication Landscape

There is a rising interest in satellite-based connectivity in the Indian market among internet service providers. Eutelsat OneWeb India, Jio Satellite Communications, Elon Musk’s Starlink and Amazon’s Kuiper are in the process of obtaining the requisite licenses to provide satellite communication services in India. Satellite communications represent an inevitable technological development in response to a continued demand for better network quality and higher capacity.
In this background, the Telecommunications Act, 2023 (“Telecommunications Act”) which received the President’s assent on December 24, 2023 and provides for administrative allocation of satellite spectrum as well as liberalization of the FDI policy applicable to the space sector further spurs the gaining momentum in satellite-based communication technology in India. This note explores the regulatory shifts in the Indian satellite communications landscape.


Capital Gains and Beneficial Ownership Test

Indian Tax Treaties: Capital Gains and Beneficial Ownership Test

India’s double tax avoidance agreements (“DTAAs”) with certain countries (for e.g. Singapore, Mauritius and the Netherlands) provide that the capital gains on sale of shares is taxable only in the resident country of transferor and no tax is payable in India. However, the tax authorities have disputed the benefit available under the DTAAs by applying the “beneficial ownership” test. Further, they have also argued the sufficiency of tax residency certificate (“TRC”) to claim such benefit. In this note we analyze these aspects in light of the decision of Delhi High Court in Blackstone Capital Partners (Singapore) VI FDI Three Pte. Ltd., appeal against which has been recently admitted by the Supreme Court.


Legal considerations of investing in india

Investing in India: An Overview of Legal Considerations

Foreign investment is a key contributor to India’s growth story and India continues to consistently experience growth in inflow of foreign direct investment (“FDI”). The Government of India has announced that the provisional figure of FDI inflow into India for the financial year ended March 31, 2023 was USD 71 billion and according to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report, India remains a favored destination for global investors.
In this note we discuss certain key legal considerations for a foreign investor investing in India.
 


Considerations in Outbound Foreign Investment

Geopolitical and National Security Considerations in Outbound Foreign Investment

In a world characterized by geopolitical shifts and heightened national security concerns, the realm of foreign investment is undergoing a profound transformation. Disruptive events, evolving alliances and strategic recalibrations are increasingly influencing how nations perceive the risks and opportunities associated with foreign investment. As international power structures continue to evolve, the rise of new global players – coupled with technological competition in emerging sectors, underscore the need for nations to reassess their foreign investment strategies in alignment with broader geopolitical goals.
In turn, businesses may be expected to not only navigate multiple FDI regimes in the future, but different outbound screening regulations too. Although the final scope of outbound investment review regimes is still being decided, both the US and the EU have indicated that critical technologies which have the potential to advance military and dual-use capabilities, especially in respect of outbound investment into strategic adversaries, will be additionally scrutinized. Accordingly, investors may need to integrate such factors in their due diligence and risk management processes.


Disclosure Requirement SEBI Listing Regulations

Assessing the Sweep of a Recently Introduced Disclosure Requirement in the SEBI Listing Regulations

On June 14, 2023, the Securities and Exchange Board of India (“SEBI”) notified certain amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”). The amendments are designed to strengthen corporate governance in listed entities by enhancing shareholder suffrage and disclosure of material events. Notably, the amendments introduced a new Regulation 30A that is to be read with a newly inserted Clause 5A of Paragraph A of Part A of Schedule III to the SEBI Listing Regulations (“Clause 5A”). Regulation 30A mandates shareholders, promoters, promoter group entities, related parties, directors, key managerial personnel, and employees of a listed entity or of its holding company, subsidiary, or associate company (“Specified Persons”) to notify the listed entity as and when any of them enters into agreements covered by Clause 5A (“5A Agreements”).
This note highlights the key features of Clause 5A and outlines certain practical considerations for Specified Persons and listed entities.


Amendments to the Voluntary Delisting Process

Proposed Amendments to the Voluntary Delisting Process

The Securities and Exchange Board of India issued a consultation paper proposing certain amendments to the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021. Amendments have been proposed to the counter-offer mechanism of the reverse book-building process, manner of calculation of floor price and the determination of the reference date. A fixed-price route for delisting and a framework for delisting of investment holding companies have also been proposed. This note summarizes the proposed changes to the voluntary delisting process.