COVID-19 AND STOCK MARKET CRASH: SHOULD SEBI BAN SHORT-SELLING?

Tanuj Agarwal, Institue of Law, Nirma University

Introduction

Covid-19 pandemic has raised serious apprehensions surrounding health and safety causing a lockdown in India.  The pandemic has caused a worldwide recession and has spooked investors’ sentiment. Prior to the coronavirus outbreak, the Indian stock market was in full positive swing as Sensex and Nifty had reached their all-time intraday peak of 42,273.87 and 12,430.50 respectively in January, 2020. Even after attaining such progress, the Indian stock market is witnessing the most difficult period for the past few months. The stock market has observed lower circuit levels after 12 years on March 13, 2020. Afterward, the equity index discerning a continuous downfall. On March 19, 2020, Sensex crashed below 27,000 and Nifty breached the level of 7,900, thereby attained their five-year closing low levels. Consequently, an approximate downfall of 37% is evident in both the equity indices within a period of just 2 months. The stock market has seen a considerable collapse due to high market volatility. This downfall has degraded the financial market and faded the interest of investors and corporates. Thereby, the concern is whether such a market downturn can be controlled by restricting short-selling.

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Is Covid-19 a Force Majeure Event? : A Global Scenario

Nitya Jain, 4th year law student, Nirma University

Introduction

The world position at a standstill, for an unforeseeable force disrupts lives across boundaries. Covid – 19 has emerged as a pandemic whose expiration is still a blurry vision. As a retort to the deadly virus, the governments of various nations have put strict travel restrictions with almost nil movements of goods and people, leading to severe disruptions in the supply chains all over the world. Consequently, various contracts are being assailed or tend to be violated because of late or no delivery. This article assembles and then, analyses the answers of various governments to the question – Whether Covid -19 pandemic can amount to a force majeure event, excusing parties of their contractual obligations for time being?

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Enhancing Dispute Resolution Through DLT: A Case For Regulatory Framework Of “Smart” Contracts

Urmil Shah, 3rd year law student, Auro University Surat

Introduction

There has been quite deliberations on distributed ledger technology and its application with smart contracts on utilizing it as a mode of dispute resolution, from a conflict management standpoint. Although, smart contracts provide endless potential to assist disputing management, particularly in the field of international arbitration due to its delocalized nature; however, the compliance of such contracts with the domestic legal regime of states is imperative to ascertain the validity, from legal certainty standpoint.

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Covid-19 and the Extent Of Contracts Enforceability: Impact on Commercial Contracts

Shubham Gupta, 4th year law student, Nirma University

Introduction

With an unprecedented turn of events in the wake of COVID -19, the enforceability of contracts have become a major lookout. Giants such as Inox Leisure Ltd., PVR, Cinepolis are invoking the Force Majeure [“FM Clause”] in their contracts for subduing the rental obligations to their landlords.[1] COVID-19 has caused serious market disruptions and financial dislocations. The basic assumption is that there is a fundamental change in market circumstances due to the uncertainty of an outbreak, and there is a persisting problem until the extenuation of the disease.

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Extraterritorial Compliance with Corporate Governance Norms

Shubham Gupta, 4th year law student, Nirma University

*Originally published on India Corp Law

The Securities and Exchange Board of India (SEBI) has elucidated its position with the respect to the extra-territorial application of its corporate governance norms. In a recent informal guidance in the matter of KCP Limited, SEBI interpreted regulation 24(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR). The provision stipulates that an independent director of a listed company is to be appointed on the board of directors of an unlisted material subsidiary, whether incorporated in India or not. SEBI found that the provision needs to be adhered to extra-territorially if a foreign subsidiary’s home jurisdiction does not prohibit the compliance thereof. This post seeks to analyze the regulator’s approach towards the extra-territorial application of corporate governance norms.

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Understanding ‘Network Effect’

Abhishek Tripathy, 4th year law student, Nirma University

Network effect can be defined as a consumer’s effect from using a good or service on the total perceived value of that product or service for others. The number of users/consumers who use a product or service is directly proportional to the value of the network. Let’s take the example of an online messenger, suppose X no. of people join the messenger, it will attract Y no. of people who are not on the platform but want to access X through the services provided by the messenger. The e-commerce scenario in India is majorly a two-sided market, wherein there is a user network, a seller network and they both are connected through an intermediary.

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Tracking the Data Protection Regime in India

Abhishek Tripathy, a 4th year student at the Institute of Law, Nirma University

Introduction

The Personal Data Protection Bill, 2019 as introduced in Lok Sabha has been referred to a Joint Parliamentary Committee of both the Houses, under the Chairperson of Smt. Meenakshi Lekhi for further evaluation. It has to be noted that this bill is not the same as the Draft Personal Data Protection Bill, 2018 which was made public by the Srikrishna Committee last year. The bill which is most likely to be placed in the winter session is expected to have certain changes especially with regards to the data localization norms. The bill will mark the way for a new data protection regime in India.

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SEBI swerved on non-interference in Winding Up matters

Shubham Gupta, a 4th year student the Institute of Law, Nirma University.

Introduction

In the recent Adjudication officer (‘AO’) order dated on 31st December2019, SEBI took a stand that it can proceed with the adjudication proceedings against a company even though the company is under liquidation. This stand is inconsistent with the approach adopted by SEBI till now and is likely to be non-est. in law.

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SEBI Engulfs Non-Monetary Transactions – Extending tThe Scope of Material Financial Relationships

Shubham Gupta, a 4th year law student at the Institute of Law, Nirma University, Ahmedabad

Introduction


In the recent informal guidance dated 6th Jan. 2020 in Gujarat State Petronet Ltd., the SEBI, in response to the interpretative letter, has clarified that even non-monetary transactions are within the scope of material financial relationships. Clause 14 of Schedule B of SEBI (PIT) (Amendment) Regulations, 2018 stipulates that all designated persons in a company are required to disclose the details of those persons with whom they share a “material financial relationship”. Bringing non-monetary transactions within the ambit of material financial relationship – may have far-reaching unintended consequences and senior executives may be stretched into the blanket of violation easily. This article seeks to analyze the informal guidance issued by SEBI, and emphasizing the needs of the industry.

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Splitting CEO’s Duality role: The landscape to independent Board Leadership ?

Shubham Gupta, a 4th year law student at the Institute of Law, Nirma University

*Orginally published at Taxmann.com

Introduction

In 2019, the Indian financial market has confronted many climacteric corporate issues like IL & FS, DHFL, Tata- Mistry, Infosys, etc. which appeal for a change in dynamics of corporate governance and compliance culture. In this regard, regulators and government bodies relentlessly fosters to adopt better compliance practices across the world. One of such advent interventions, the capital market regulator, SEBI vouched for separation of position of chairman and CEOs/ managing directors – which, in turn would cultivate a corporate democracy.Separation of position and roles of the chairman of board and CEOs/Managing directors is assumed on the basis that the management look over the affairs of  the company whereas the board supervises the management, on behalf of the shareholders of the company. Essentially, this demand a non-aligned interest between the board and the management to have effective governance and management.

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