Capital Markets and Securities Law

[By Sharad Dhruw] The author is a student of Hidayatullah National Law University, Naya Raipur Introduction In recent years, a significant evolution in the regulatory framework governing related party transactions (RPTs) under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has taken place. This evolution reflects the SEBI’s transition from a regime that was primarily form-based to that of substance-driven and focused on economic scrutiny of disputed transactions, minority protection, and transparency. In order to achieve these objectives, the Securities Appellate Tribunal (SAT) has established a broad definition of materiality, aggregation, and value transfer in the context of related party transactions by its recent order. The Tribunal has recalibrated the compliance obligations applicable to listed businesses and strengthened SEBI’s broader governance mission by emphasizing economic substance above legal characterization. Through this article, the author examines the SAT’s interpretation of the RPT framework. First, it outlines the key interpretative decisions, which includes related party aggregation, its view of strategic allocations as resource of transfers, its reliance on valuation for materiality and its greater emphasis on non-interested shareholder approval. Second, it examines the concerns these changes raise questions about regulatory proportionality, compliance assurance, and the limits of acceptable engagement in economic decision-making, even as they fortify protections against value diversion and conflicts of interest. Lastly, it puts forth a constructive way forward, informed by legal best practices. Examining the Recent SAT Order Firstly, for the purpose of determining materiality under Regulation 23(1) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the transactions which are entered into a related party in a financial year must be aggregated, notwithstanding whether it arises from a single or multiple independent contracts. SAT in its order under Regulation 23 has been treated as a complete machinery provision, mandating aggregation at the level of the related party rather than at the level of individual contractual arrangements. This aggregation-centric interpretation finds resonance in the EU Shareholder Rights Directive II (SRD II), which also mandates comprehensive review of significant related-party transactions in order to identify covert value transfers and protect minority shareholders. Secondly, the tribunal held that the geographical and product allocation of business between related parties with respect to a joint venture or shareholders’ agreement may constitute a “transfer of resources, service or obligations”, which qualifies as a related party transaction under Regulation 2(1)(zc) of the LODR, 2015. This allocation may involve the transfer of profit-making apparatus, including goodwill, customer relationships, and future revenue generating capacity, even in the absence of immediate assets transfer or monetary consideration. This portrays a substance-over-form approach, where impact on shareholder as well as economic consequences are prior over formal legal characterisation. In the regulatory domain, SEBI has consistently emphasised the requirement for an enhanced scrutiny of promoter-driven restructuring that affect minority shareholder, specifically by requiring that all material RPTs must disclose detailed pricing, valuation, and impact information to prevent value migration and ensure transparency. This aligns with IOSCO’s global guidance, which recognize that, transfers of commercial opportunities, intangible benefits, or future economic rights may constitute value transfers in related-party contexts even in the absence of formal asset conveyance, thereby warranting enhanced regulatory scrutiny. Thirdly, the tribunal’s recognition of valuation a crucial mechanism for evaluating the materiality and fairness of complex related party arrangements, specially where transactions involve territorial allocation, business realignment, or transfer of future economic benefits supports the SEBI’s direction to appoint an independent valuer to measure business acquired and lost, while highlighting out that without valuation, it would be impossible to determine whether shareholder approval is necessary or whether materiality thresholds under Regulation 23(1) have been crossed. This clarifies the established corporate and securities law practice where valuation is frequently applied in mergers, demergers and reorganizing transactions to ensure informed shareholder decision making. From a regulatory point of view, SEBI has relied steadily on valuation-assessed assessments in related party transactions, preferential allotments, and scheme approvals, reflecting a wider trend against procedural compliance and towards economic substance and fairness examination. A comparable emphasis aligns in the ESMA’s opinion undue costs in UCITS and AIFs,  stating the need to “identify, prevent, manage and monitor conflicts of interest to avoid detriment to investors,” highlighting similar objectives in material related-party scrutiny. Lastly, the ruling reaffirms the importance of non-interest shareholder approval.  This is a not a mere formality rather a substantive protection intended to protect minority interest in conflict-of interest situations involving related parties when a transaction or arrangement is determined to exceed materiality standards under Regulation 23. This aligns with the legal objective of the strengthened RPT regulation for listed businesses, which sets more stringent governance requirements rather than those found in the Companies Act, 2013 alone.  In Needle Industries Ltd. v. Needle Industries Newey, the Court stressed the importance of treating minority shareholders with fairness and transparency. This is further reflected in SEBI’s ongoing tightening of RPT standards through amendments to the LODR, 2015 Regulations. Similarly, the OECD Principles of Corporate Governance recognises independent shareholder approval as a central mechanism for ensuring accountability and preventing abusive RPT’s. Legal challenges consistent with the order. While the enhanced RPT framework strengthens investor protection, listed companies involved in a variety of commercial arrangements suffer uncertainty due to its broad interpretation of materiality, value transfer, and valuation. These issues indicate that, in spite of its protective objectives, the regime might need to be examined more closely to deliver proportionate and practically feasible control. First, Regulation 23(1) does not provide clarity by requiring all transactions with a related party to be aggregated within a fiscal year, but it also raises questions about how legally and commercially separate contractual arrangements are to be handled. By collapsing legally and commercially distinct contracts into a single aggregated assessment without regard to their underlying nature, purpose, or risk profile, the framework deprives listed entities of a predictable benchmark for determining ex ante whether a particular transaction is likely to trigger materiality thresholds, thereby generating compliance uncertainty. Since, materiality is evaluated cumulatively without taking into account the nature, purpose,

[By Raghav Sharma] The author is a student of Indian Institute of Management Rohtak.   Introduction The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) establish a comprehensive framework to prevent insider trading while maintaining market efficiency. Central to this framework is the concept of Unpublished Price Sensitive Information (UPSI), which governs both corporate disclosure obligations and restrictions on individual trading. Central to this framework is the concept of Unpublished Price Sensitive Information (UPSI), which governs both corporate disclosure obligations and restrictions on individual trading. Recent decisions by the Securities Appellate Tribunal and the Supreme Court in Reliance Industries Limited (May 2025, upheld December 2025), alongside SEBI’s Quasi-Judicial Authority order in Adani Green Energy Limited (December 2025), have prompted discussions about regulatory consistency. This article examines these decisions not as conflicting precedents, but as complementary components of a dual-track regulatory framework addressing distinct obligations under separate provisions of securities law. The Conceptual Foundation: What Constitutes UPSI? Regulation 2(1)(n) of the PIT Regulations defines UPSI as information relating to a company or its securities that is not generally available and, upon becoming generally available, is likely to materially affect the price of securities. The definition hinges on two critical concepts, materiality and general availability. Regulation 2(1)(e) defines “generally available information” as information accessible to the public on a non-discriminatory basis. Beyond this statutory guidance, the N.K. Sodhi Committee Report (2013), which forms the legislative foundation of the 2015 PIT Regulations, deliberately refrained from exhaustively defining “non-discriminatory access”, observing that this would be “a question of fact, to be answered by adopting the standard of a reasonable man”. The Committee clarified that paywalled access does not render information discriminatory, since it remains accessible to any person willing to pay. Through subsequent adjudicatory practice, notably in 63 Moons Technologies Ltd. (2018) and Bharti Airtel Ltd. (2020), SEBI applied contextual factors including source credibility and reach, specificity of reported facts, and corroboration across multiple outlets. The Note appended to Regulation 2(1)(n) clarifies that information published on a stock exchange website would ordinarily be considered generally available. However, the precise interaction between media reports, corporate authentication, and formal disclosure has evolved through legislative amendments and judicial interpretation. The 1992 PIT Regulations used the phrase “not generally known or published by the company,” suggesting information could become known through means other than company publication. The landmark decision in Hindustan Lever Ltd v. SEBI (1998) recognized that market expectations reported in media could constitute generally known information. However, a 2002 amendment narrowed this definition, requiring information to be “published by the company or its agents” to cease being unpublished. The 2015 Regulations adopted a broader approach, providing that information would be generally available if accessible to the public on a non-discriminatory basis, regardless of source. This expansive interpretation received judicial support in several decisions, most notably the Securities Appellate Tribunal’s decision in Future Corporate Resources Pvt. Ltd. v. SEBI (December 2023), which explicitly rejected a restrictive view that only stock exchange disclosures constitute generally available information. The May 2024 Amendment: Adding Nuance The May 2024 amendment to Regulation 2(1)(e) excluded “unverified event or information reported in print or electronic media” from the definition of generally available information. This amendment introduces an important qualification that not all media reports render information generally available. The distinction between verified reporting containing specific facts from credible sources and unverified speculation or rumours becomes legally significant. This amendment does not represent a reversion to the restrictive 2002 approach. Rather, it recognizes that the quality and reliability of media reporting vary substantially, and regulatory frameworks must distinguish between substantiated journalism and mere speculation. To illustrate this distinction, consider a scenario where Reuters reports that “Company X is in advanced merger talks with Company Y, according to three sources familiar with the matter, with a deal expected within two weeks.” This would likely constitute verified information under the May 2024 framework due to multiple attributed sources, specific factual details, and a credible news outlet. Conversely, a social media post stating “hearing rumors that Company X may be exploring partnerships” would constitute unverified information lacking substantiation. The amendment thus creates a qualitative threshold, permitting trading based on substantiated journalism while preserving the UPSI character of mere speculation. While the May 2024 amendment post-dates both the Reliance and Adani Green decisions, it crystallises a distinction that was already implicit in the regulatory architecture these cases navigate. The amendment’s exclusion of “unverified” media reports from generally available information does not, in either case, retrospectively alter the legal principles applied—both involved substantiated reporting from credible sources containing specific, verifiable facts. Rather, the amendment provides an interpretive lens that sharpens the inquiry: the relevant question is not merely whether information appeared in media, but what quality of information was disseminated and to whom the corresponding regulatory obligation attaches. The cases examined below illustrate this differentiation precisely, Reliance addressing corporate disclosure duties triggered by media leakage, and Adani Green addressing individual trading restrictions where verified media reports rendered information generally available. Together, they demonstrate the complementary operation of India’s dual-track framework, a coherence the 2024 amendment now makes explicit. The Reliance Framework: Corporate Disclosure Obligations The Reliance case involved negotiations between Facebook and Reliance Industries for an investment in Jio Platforms Limited. On March 24, 2020, major publications such as the Financial Times, Reuters, and The Economic Times reported on an impending deal. Following these reports, the stock price rose by approximately 15 percent. The formal announcement came nearly a month later on April 22, 2020, resulting in an additional 10 percent price increase. SEBI alleged violations of Section 30(10) and 30(11) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with Principles 1 and 4 of Schedule A to the PIT Regulations. Critically, the allegations did not concern Regulation 4, which prohibits trading while in possession of UPSI, but rather the Code of Fair Disclosure provisions. Principle 1 requires prompt public disclosure of unpublished price sensitive information that would impact

[By Shaunak Rohit Wagle] The author is a student of Maharashtra National Law University, Mumbai   For more than a decade, the Securities and Exchange Board of India (SEBI) has experimented with ways of taming algorithmic trading. Circulars in 2012 and 2016 addressed risk controls for brokers and exchanges, and a 2025 circular aimed to clarify obligations in the rapidly evolving “retail-algo” space. However, none of these attempts had ever been codified in the SEBI (Stock Brokers) Regulations, 1992. This changed in August 2025, when SEBI proposed to incorporate the following statutory definition of algorithmic trading in the aforementioned regulations: “Algorithmic Trading” means any order generated/placed using automated execution logic.” Prima facie, this is a straightforward act of consolidation; however, in substance, it is a radical expansion. It entails the inclusion of every order touched by automation, from the most sophisticated high-frequency strategy to retail SIP auto-executed through an application programming interface (API) in the definition. By making the definition broad instead of precise, SEBI risks blurring vital distinctions, overburdening small intermediaries, and stunting innovation and growth in India’s fintech ecosystem. SEBI’s draft definition gives rise to doctrinal ambiguities and potential economic burdens that warrant careful reassessment. SEBI should rework its approach through a tiered definitional framework, a retail sandbox, and a clarified liability allocation. A well-balanced framework can help SEBI fulfill its dual statutory mandate under Section 11 of the SEBI Act: to protect investors while promoting market development. The Problem of Overreach At its core, financial regulation derives legitimacy from statutory authority. SEBI’s mandate under the SEBI Act, 1992, is straightforward: regulate intermediaries, not clients or software vendors. Yet, by defining algorithmic trading as “any order generated/placed using automated execution logic,” the draft threatens to expand SEBI’s jurisdictional powers indirectly to actors far outside its ambit. While the definition is housed within the Stock Broker Regulations, its practical implications extend further. A stockbroker’s compliance obligations inevitably shape its commercial relationships. If every automated order is deemed ‘algorithmic trading,’ brokers will be compelled to impose stricter due diligence, contractual obligations, and potential liabilities on the fintech firms and vendors that provide API access and other automated tools. This creates a de facto regulatory burden on these entities, as they must conform to the broker’s heightened requirements to remain in business. This means that a broker using basic order-routing software would, under this definition, be deemed to have engaged in “algorithmic trading”. A client using an API to execute recurring trades might also fall within its scope. This is not because SEBI would regulate the client directly, but because the broker, who is the regulated entity, would be obligated to treat the client’s automated instruction as a regulated ‘algorithmic trade.’ Consequently, the broker would need to subject the client to more rigorous monitoring, risk management protocols, and potentially restrictive terms of service, thereby indirectly bringing the client’s actions under the ambit of the regulation. This interpretative sprawl creates doctrinal instability. Delegated legislation cannot extend beyond the scope of the parent statute. The overreach is not one of direct regulation but of indirect consequence, where the broker acts as a conduit for regulatory burdens that ultimately fall upon their clients and technology partners. Thus, SEBI risks straying into ultra vires territory by sweeping in activity that is not meaningfully broker conduct. Definitional Ambiguity The absence of clarity in the definition is also a problem. The phrase “automatic execution logic” is not defined. It raises multiple questions, like – Does it mean any pre-programmed function? Does it require decision-making autonomy, or is mere automation enough? SEBI’s own past practice suggests the former. The 2012 and 2016 circulars specifically distinguished between discretionary algorithmic systems and routine automation. The former involves systems making autonomous decisions on parameters like price or timing (e.g., a VWAP algorithm), whereas the latter simply executes a client’s pre-determined instructions without any independent decision-making (e.g., an automated SIP instruction). The 2025 circular went one step ahead and demarcated retail automation as a distinct phenomenon. The draft, however, collapses these definitions into a single catch-all. The result is doctrinal incoherence: a haphazard definition inconsistent with SEBI’s own regulatory history. Compliance Burdens and Constitutional Concerns Definitions have significant ramifications as they affix liability. A broad definition does not simply describe; it mandates who must register, what risk controls must be implemented, what audits may be performed, and what liabilities may be attached. SEBI risks imposing compliance burdens where no systemic risks exist by equating trivial automation with high-frequency trading. This essentially undermines the very proportionality required by Article 14 of the Constitution. Comparing Approaches: India’s more extensive Definition compared to other countries The dangers of SEBI’s approach are emphasized by a comparative study of other jurisdictions. The European Union’s MiFID II is instructive. Therein, algorithmic trading is defined narrowly: it only occurs when a computer algorithm automatically determines order parameters such as timing, price, or quantity. Explicit exclusions remove order-routing systems, post-trade processing, and data feeds from scope. The EU’s choice was deliberate as it reflects a clear regulatory philosophy: regulation should only apply when an algorithm substitutes for human discretion in setting economically significant variables. Similar trends are seen in the United States. The SEC’s Market Access Rule requires brokers to deploy risk controls, but does not attempt to regulate “algorithmic trading” in the abstract. The CFTC’s proposed Regulation AT, ultimately withdrawn after facing significant industry opposition over its high compliance costs and controversial source code repository requirements that raised intellectual property concerns, was designed to apply only to automated systems that generated order parameters, excluding tools used solely for order management.  Similarly, the frameworks of Singapore’s MAS and Hong Kong’s SFC define algorithmic trading as systems that make independent trading decisions, while tailoring compliance requirements to match the level of system complexity. India is perhaps the only country amongst other major jurisdictions to have taken such an anomalous stance by defining algorithmic trading as “any order using automated execution logic”. Such a broad definition entails that nearly all trading

[By Himansh Soni and Ankit Kumar Yadav] The authors are students of Hidayatullah National Law University,Raipur. Introduction India’s corporate bond market has been witnessing a pronounced expansion, with outstanding issuances nearing the Rs. 55 trillion mark. Notwithstanding the substantial surge, the limited retail investor participation has been a persistent challenge to the evolving bond market. In response, the Securities and Exchange Board of India (‘SEBI’) has taken steps aimed at broadening retail participation in the market, such as the recent proposal to incentivize the issuance of certain public bonds. However, the effectiveness of these measures’ hinges on the structural soundness of the expansionary reforms and the underlying market structure. In pursuit of structural development in the corporate bond market, the board issued a circular specifying the conditions for debenture trustees (‘DTs’)  for carrying out non-regulated activities (‘Circular’). This comes in furtherance of the Securities and Exchange Board of India (Debenture Trustees) (Amendment) Regulations, 2025, which allowed debenture trustees to undertake activities that fall outside the purview of SEBI and are regulated under any other financial sector regulator. The conditions outlined by the regulator mark an unprecedented step, in terms of global regulatory practices, towards building the financial viability of the job of DTs while advancing the board’s objective of making the bond market retail-friendly. In this blog, the author offers a critical analysis of various aspects of the circular, including the structural segregation adopted by means of the Separate Business Unit (SBU) ring fencing mechanism for DTs. To begin with, it addresses the key implications of the circular, along with their legal context and analysis of global best practices. Secondly, it highlights the potential shortcomings of the segregated mechanism adopted in the circular. Finally, it proposes recommendations by the author to alleviate these challenges, summing up the circular with a way forward. Decoding The Reforms The SEBI, exercising its statutory powers under Section 11(1) of the Securities and Exchange Board of India Act 1992, has regulated the undertaking of activities outside its purview by the DTs by the insertion of Regulations 9C and 15A in SEBI (Debenture Trustees) Regulations, 1993 (‘DT Regulations’), which provide for the permitted non-regulated activities and enhanced oversight powers of DTs, respectively. The regulatory intervention aims to resolve the financial unsustainability of the job of the DTs arising out of low income from fees, in contrast to high monitoring costs. However, regulators’ limited resources may be better deployed to protect retail-level and vulnerable consumers than those who have greater levels of experience or net worth. The SEBI, in furtherance of Regulation 9C of the DT Regulations, specified the conditions for DTs to undertake non-regulated activities. Firstly, the board has mandated that non-regulated activities be conducted on an arm’s-length basis only by the Separate Business Unit (SBU) of DTs. This measure is to prevent potential conflicts of interest that could arise when the monitoring and enforcement functions of DTs owed to debenture holders are superseded by commercially motivated non-regulated activities. It aligns with Schedule III of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008, which requires intermediaries to mitigate and disclose any conflict of interest.  The principle of prevention of conflict of interest is also reflected in international legal principles, such as the International Capital Market Association’s note on International Practices of Bond Trustee Arrangements, which expects the trustees to act independently by avoiding conflicts of interest. However, in other global jurisdictions, the principle of prevention of conflict of interest has not been translated into the incorporation of a ring-fenced mechanism for trustees. For instance, Section 310(b) of the US’s Trust Indenture Act of 1939 employs only a time-bound approach by providing DTs with a ninety-day period to eliminate any conflict of interest. The regulator’s prescriptive approach represents a regulatory refinement unique to Indian market conditions, which has a narrow and fragile investor base with a retail participation of less than two percent, in contrast to developed markets such as the US, where retail participation is estimated at 28 percent. Secondly, Each SBU must have a “Chinese Wall” that insulates it from trustee operations, with dedicated and independent staff, a separate grievance-redressal framework, and individually maintained records. Further, Shared IT systems or infrastructure may be used, but only with explicit board-approved protocols. SEBI has also strengthened transparency requirements, as DTs must display the mandatory disclosures for investors on their websites. he use of Chinese walls as a segregation mechanism is consistent with international regulatory practices. The Senior Management Arrangements, Systems and Controls Sourcebook (SYSC) 10.2 of the United Kingdom’s Financial Conduct Authority (FCA) requires firms to establish a Chinese wall arrangement to manage conflicts and internal information regulation. The need for the establishment of information barriers has been repeatedly underscored by market failures such as the London Whale scandal, wherein the investigations highlighted the possibility of concealment of losses in the information booklet by chief information office (CIO) employees. Similarly, in the Enron Scandal, the firm exploited the obscurity in both the internal control and accounting loopholes to conceal outstanding debts, leading to the enactment of the Sarbanes-Oxley Act of 2002 to reinforce internal controls and the financial reporting standards. Shortcomings Of The Framework While the Circular marks a major step towards building the financial viability of DT’s job in line with market realities in the Indian corporate landscape, which continues to exhibit fragile retail participation, concerns surrounding the expected challenges to its efficiency demand closer examination. Firstly, whereas the board requires an arm’s length separation structure, the structure does not stipulate operational standards, including the requirement of independent reporting lines. In the absence of independent reporting lines, the segregation risks being merely functional rather than institutional, conflicting with the aim of mitigating conflicts of interest. For instance, if the heads of both the SBUs report to the same senior management, there may be an overlap in managerial decisions over operational decisions, which will influence the outcomes of enforcement. In such a structure, the trustee SBU may hesitate to promptly report and enforce covenant

[By Mayank Upadhyay and Atharv Sharma] The authors are students of Hidayatullah National Law University. INTRODUCTION Following India’s goal to foster a nurturing environment for start-ups, the Securities and Exchange Board of India (‘SEBI’) has recently announced a seismic overhaul of the Angel Funds Framework. These funds are a sub-category of Alternative Investment Funds (AIF – Category I), which provides foundational support to a start-up during the early stages. These funds function by pooling capital from high-net-worth individuals (Angel Investors), to invest in early-stage start-ups, providing the start-ups with both capital and mentorship during the initial turbulent period. This reform seeks to achieve a dual goal: fostering a conducive environment for start-ups by encouraging investments in them and limiting the risks involved in such investments exclusively to individuals having commensurate risk appetite. To achieve this dual goal, SEBI, via circular dated 10th September 2025 (‘Circular’), has introduced a fundamental ‘regulatory bargain’ by drawing inspiration from the US qualified purchaser rule. This bargain offers unprecedented flexibility to Angel Funds registered under the SEBI (AIF Regulations) 2012 (‘AIF Regulations’), in exchange for restricting investment rights exclusively to independently verified Accredited Investors (‘AI’). This shift aligns with the thriving angel ecosystem, showcasing a Compound Annual Growth Rate (CAGR) of 106% in investments, opening the possibility of attracting ultra-wealthy investors who hesitated from investing due to outdated rules. However, these changes necessitate examination of how the underlying objectives can be better realised by studying practices across different jurisdictions. Therefore, this blog examines various issues surrounding the Circular. First, it analyses the changes introduced by the Circular. Next, it reveals the hidden flaws in the new framework. Finally, it evaluates and proposes additional reforms that could aid this overhaul by drawing lessons from other jurisdictions. THE CORE BARGAIN: CHANGES AND INTENT First and foremost, the Circular has limited the investor base of Angel funds exclusively to the AIs. This entails that only those individuals/body corporates are capable of investing in start-ups, through the instrument of Angel funds, who have been accredited by independent third-party recognised as accreditation agencies by the SEBI. Prior to these, any investor who fulfilled the wealth-based criterion laid down in the AIF regulations was entitled to participate in the investment schemes rolled out by Angel Funds. This fulfilment was attested entirely through self-declarations by investors. However, in an attempt to limit the risk to only those having a commensurate risk appetite, SEBI has laid down a strict wealth-based criterion for these accreditations. This change ensures that only reliable investors are permitted to invest in the start-ups, and also supports the ecosystem by channelling vetted and trustworthy capital. Second, the Circular has granted upon the AIs, the status of a Qualified Institutional Buyer (‘QIB’) as defined in SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. Prior to this, Reg. 19E(2) limited investments via Angel Funds to no more than 200 investors to bring the limit in line with the restriction placed upon private companies under the Companies Act, 2013. However, upon combined reading of S. 42 of the Companies Act 2013 with R. 14(2) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, this manoeuvre effectively excludes the AIs from the calculation of the numerical limit, which is placed on the membership of private companies. Third, the circular eliminates the restriction placed on the Angel Funds in the Reg. 19F(5) of AIF regulations, which mandates that not more than 25% of the total investments of an Angel Fund can be made in a single venture capital undertaking and must be within the limits specified, i.e., 25 lakhs to 10 Cr. Furthermore, the Circular permits Angel Funds to make Follow-on investments in companies even after they cease to be start-ups, as defined by the Department for Promotion of Industry and Internal Trade (‘DPIIT’). This change effectively permits an Angel fund to invest any proportion of its corpus into any start-up and continue to invest in it, regardless of it ceasing to be a start-up. This regulatory change has been introduced to safeguard the pre-emptive rights of angel investors in their portfolio companies and to preserve the value of their investments. THE NEW REGIME: FULFILLING OR SELF-DEFEATING? Firstly, a high wealth-based threshold for accrediting investors suggests the prioritisation of wealth over expertise. The new framework jeopardises seasoned entrepreneurs and domain experts in possession of invaluable industrial knowledge, but lacks the wealth-based criteria set up by the new regulations. This prioritisation of wealth condenses the quality of guidance and network available to the early-stage startups. Furthermore, reportedly, India has only around 650 registered Accredited investors (AIs) while the US has about 24 million of them due to the high threshold and transactional cost of accreditation, directly translating into a shrinking of the available pool of capital to the startups and stifling the benevolent intent of the Angel investors. This was the main concern raised by the NASSCOM during the consultations phase, which advocated against a wealth-based definition of Angel Investor to avoid adversely impacting the startup ecosystem. Secondly, the new framework extends the status of QIB to individuals solely based on their personal wealth, ignoring the institutional grade due diligence and professional oversight that form the very core of QIB, thus creating a situation where wealth is used as a lazy proxy for institutional sophistication. It sets a risky trend that could be extended to other areas of security laws for example, Qualified Institutional Placements (QIPs), institutional allocation portion of an Initial Public Offering (IPO) etc. eroding the critical line of difference between the retail and institutional investors diluting investor protections and alter market dynamics in domains designed to rely on the sophisticated due diligence capabilities of institutions. Thirdly, the removal of 25% concentration limit in one company acts as a dereliction of the regulator’s duty to protect investors for the reason that it fundamentally clashes with the fund manager’s fiduciary duty to manage risk and protect investors’ capital, as has been set out in the case of ILFS Investment Managers v.

[By Ayushman Shrivastava] The author is a student of Hidayatullah National Law University (HNLU), Raipur. Introduction On 22nd September 2025, the Securities and Exchange Board of India (‘SEBI’) released a consultation paper on Review of Framework for ‘Technical Glitches’ in Brokers’ Trading Systems (‘Consultation Paper’), proposing revisions to its framework for managing technical glitches in brokers’ electronic trading systems. This is an effort to tweak an already existing regulatory regime (‘2022 Framework’), that has been operational since November 2022. The new proposals do not introduce new compliance burdens, but rather aim to adjust the balance between the protection of the investors and the practical realities of running a brokerage company. SEBI through these changes, signal a shift towards more precise and proportionality of regulation by reducing the definition of a technical glitch, confining the framework to bigger brokers, and streamlining the reporting mechanisms. This rethinking has to be understood in the light of the 2022 Framework. Back then, SEBI was following the approach of unveiling a comprehensive framework for all brokers with detailed guidelines released by stock exchanges a month later. The framework mandated prompt reporting of technical glitches, imposed penalties for defaults, and treated all disruptions, whether technical or otherwise, as the broker’s responsibility.. While this seemed investor-centric, it quickly came under scrutiny for being too prescriptive. Brokers resented being penalized even for disruptions that resulted from circumstances beyond their control, such as cloud service provider outages or payment gateway issues. Smaller brokers who had little technology infrastructure also felt compliance unproportionately burdensome. This article will critically examine the recent consultation paper on technical glitches by SEBI, and not just the gloss of the reforms it has offered. The redefinition of what should be considered a technical glitch seems to be exact, yet it risks absolving brokers of responsibility for disruptions that would affect investors outside regular trading hours. Equally, SEBI’s decision to exempt small brokers from the framework in the name of proportionality could inadvertently create a patchwork of regulation, leaving retail investors at the mercy of their brokers depending on size. Although the fact that reporting is being centralized and penalties are being softened is an indication of progress, the same changes can also lead to lack of accountability, as they put the burden of self-assessment and internal controls directly on the brokers. Finally, this article raises the question of whether the re-calibrated method of SEBI is sufficient in protecting the interests of investors or is too focused on regulatory convenience and industry comfort, which may compromise the integrity of the market. Glitches Redefined: Fine-Tuning Oversight or Diluting Accountability? SEBI’s idea to restrict the scope of what can be called a “technical glitch” marks one of its most consequential changes in the new Consultation Paper. Under the proposed definition, only malfunctioning during trading hours that are directly hindering trading or risk management (such as login failures, errors in placing orders or margin allocation) will fall into the regulatory net. Substitutions or failures that take place because of cloud service providers, banks, payment gateways, KYC onboarding, back-office systems, or analytical tools are specifically excluded. This seems like a logical change over the 2022 Framework, which unfairly burdened brokers with liability for things they cannot control. However, the accuracy of this new definition is purchased at a price. By excluding such broad areas of disruptions as “non-glitches”, SEBI risks undermining accountability in ways that have a direct bearing on investors. Take the example of payment gateway failures: while they are not trading, they can cause customers to miss their chance to be able to deposit their accounts in time and therefore lose out on trades, or worse, put them at the mercy of market volatility. There is also a temporal blind spot. By ignoring after-hours glitches, SEBI assumes that risks are confined to market hours. In reality, modern trading never really stops. Investors keep preparing strategies, transferring funds, and analysing their positions long after the trading bell has rung. A systemic outage at 6 p.m. may not register under SEBI’s framework, but it could undermine trading decisions the next morning. The underlying tension is apparent: SEBI does not wish to unfairly penalize brokers, but in doing so, it threatens to impose the burden of technological weakness on investors themselves. Overcorrection in regulation towards intermediaries can ultimately destroy trust in the very markets it aims to stabilize. Accuracy of definition must not be a codeword for avoidance of responsibility. Applicability and the Two-Tier Market: Proportionality or Privileged Protection? One of the most striking proposals in SEBI’s consultation paper is the narrowing of the framework’s applicability. Under the revised regime, only brokers offering Internet-Based Trading (IBT) or Securities Trading Using Wireless Technology (STWT) platforms with more than 10,000 registered clients as of March 31 of the preceding financial year will be covered. By SEBI’s own estimates, this would exempt around 457 smaller brokers from the compliance obligations. This threshold has been set by SEBI with reference to proportionality. But the larger and more technologically intensive a broker is, the more systemic its impact. Smaller brokers with few clients are not levied with an excessive compliance charge. Theoretically this is a fair difference. The migration, however, is risky due to the fact that it will create a two-tier marketplace which will act as a safeguard to investors. While large brokerage firms’ customers will be able to take advantage of the improved glitch awareness, tracking, and enforcement of noncompliance. Meanwhile, clients of smaller brokers will remain frustrated by an ineffectively designed system. There are namely three problems with this split. Firstly, these thresholds can create perverse incentives for regulatory gaming companies who are hovering over the 10,000-client threshold to not to expand their client base so that they do not have to pay to comply, and therefore ultimately restricting their own growth. Secondly, this kind of approach will generate informational asymmetry. The bugs between the exempted brokers are going to be less visible to regulators but will keep causing enormous damage to

[By Aditya Kumar and Samridhi Singh] The authors are students of Chanakya National Law University, Patna Introduction In the era of online campaigns and global movements, corporate entities have found a place for themselves to engage with the larger social discourse either through their strong advertising campaigns or their ESG commitments. What has become a trendy PR activity for most companies, especially post the success of the Nike campaign on the lines of Black Lives Matter, was initially set out to instil a sense of broader responsibility towards society and governance. This is precisely where the threat of purpose washing knocks at the door of corporate giants, with the tide turning on their faces in several instances when their practical actions fall short of their larger PR budgets. Companies like Gillette, Coca-Cola, and McDonald’s have done their fair share of what is known as Woke Washing, a subset of Purpose Washing apart from Greenwashing. Although these terms have minute differences, they share the common thread of inconsistent action when it comes to purposes beyond profit maximisation. Purpose washing, as defined in the Securities Exchange Board of India (“SEBI”) Circular titled ‘Framework for Environment, Social and Governance (“ESG”) Debt Securities (other than green debt securities)’ (hereinafter referred to as the “SEBI Circular”) dated June 05, 2025, refers to false, misleading, unsubstantiated, or otherwise incomplete claims regarding the purpose of issuance of bonds. The SEBI Circular, in pursuance of the Circular dated December 2024 and Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (“NCS Regulations”), introduced the regulatory framework for social bonds, sustainability bonds, and sustainability-linked bonds. Notably, one of the regulatory parameters covered the compliance for curbing purpose washing in cases of issuance of social and sustainability bonds. The SEBI Circular on ESG Debt Securities excludes sustainability-linked debt securities from the ambit of compliance, and it mandates keeping purpose washing in check. This specific lacuna, apart from the others, poses a serious threat to the overall purpose of the Circular itself. With this premise, the article explores the regulatory compliance for sustainability-linked debt securities and critically evaluates the void in the framework curbing purpose washing. Differing Compliances for Debt Securities ESG Debt Securities, other than green debt securities, are largely distinguishable from each other on the basis of the primary objective for which they are to be utilized. Social bonds, on the one hand, are utilized for social projects initiated to alleviate a social issue (a list of which is mentioned in the SEBI Circular). Sustainability bonds are issued for financing or refinancing of green projects and social projects as defined in the Circular. However, the third category of debt securities, i.e., sustainability-linked debt securities, does not have any set parameters of activities or objectives for which it is issued. These instruments address the predetermined goals of the issuer, furthering their broader sustainability objectives. Contrary to social and sustainability bonds, which are ‘use proceeds’ and are utilized for a specific purpose, sustainability-linked bonds attend to the sustainability goals of the issuer itself. Due to the differences in the nature of the debt security, the compliance that follows also differs significantly. Sustainability-linked debt securities are measured using Sustainability KPIs against predefined Sustainability Performance Targets (SPTs). The initial disclosures to be made by the issuers of sustainability-linked bonds revolve around the rationale for the issuance and its consistency with the broader sustainability strategy of the issuer. Moreover, the details of the KPIs and SPTs, and their modus operandi for carrying out risk assessment, need to be disclosed initially. The issuer, under this, can also elect an ESG committee in order to monitor the performance under the issuance of debt securities. These initial disclosure compliances differ significantly from those of social and sustainability bonds as they are more inward-looking in nature. They demand contemplation and introspection from the issuer as it functions as its own assessor while achieving the sustainability targets defined by it. The compliances enable the issuer (who is more of a self-serving referee in this case) to play from both sides of the fence Where the reality differs from this presupposition is when the independent third-party report surfaces in the continuous disclosures filed by the issuer. As opposed to the use proceeds, where the majority of post-issue compliance obligations revolve around reporting the utilization of the proceeds and their subsequent social impact, KPI-based securities depend on the international standards for post-issue compliance. The predicament with international standards arises from the leniency granted by the regulator to issuers in choosing the standard they wish to comply with. Certain standards, like indicators of the European Union, present a discrepancy in the compliance requirement for green bonds and sustainability-linked bonds, where, on one hand, for the former, it offer robust protections to investors, and for the latter, the disclosure requirements remain voluntary in nature. This, in pursuance of the prior heavy-handedness of the issuer in the initial disclosure, puts the investor in a dubious situation. Essentially, it demands that the investor be active in ascertaining the protections offered by the international standard to be adopted by the issuer, as mentioned in the offer document, along with the report of the reviewer for the issue of sustainability-linked debt securities. The curious case of purpose washing Although it appears that the SEBI Circular intends to remain consistent with the international standards by requiring SPTs to be ambitious and material, it fails to maintain a robust mechanism to keep the threat of purpose washing in check. Interestingly, the compliance mentioned in the Circular to curb purpose washing does not require any such compliance on the part of issuers of sustainability-linked bonds. For debt securities with the flexibility and lack of end-use restrictions, like that of sustainability-linked bonds, a complete absence of adherence to any set of rules for purpose washing puts investors in a turbulent position, as the fluctuations in the interest rates on these bonds rely on the fulfillment of the targets set by the issuer. Considering the overbearing

[By Kushagra Prasad] The author is a student of Gujarat National Law University Introduction: Governance Gaps in MIIs Market infrastructure Institutions of India, including the stock exchange, clearing corporation, and depositories, have come under increasing scrutiny for their governance structures. Keeping in mind their strategic positioning within capital markets and possible conflict of interest, the Security Exchange Board of India (SEBI) issued a consultation paper on 24 June 2025 that required the appointment of two distinct Managing Directors (MD) level professionals: one to manage core business and trading, and another for risk, compliance and investor grievance-related functions. The additional officer will be an independent board member, standing equal to current MDs, and will report quarterly to the MII board and SEBI. This change addresses long-standing issues that MIIs have had, such as too much power vested in one MD-led system, and has reduced oversight of critical compliance and risk activities. SEBI seeks to strengthen internal control, minimize conflict of interest, and ensure board-level attention to core regulatory activities by splitting up senior leadership. Can introducing the dual C-suite model enhance and align India’s MIIs with global standards? This blog piece analyses whether such a change can help increase institutional integrity and investor trust, or run the risk of operational difficulties and boardroom disharmony. Policy Genesis and SEBI’s Justification The proposal for SEBI’s dual C-Suite model for MIIs is far from arbitrary. It emerges as a conscious response to a trio of pressing governance challenges. Firstly, the rising complexity in derivatives markets means that existing single-headed executive structures struggle to maintain adequate risk oversight. With the growing sophistication in derivative instruments, MIIs need specialized executive roles to parallel manage trading, counterparty risks, compliances, and technology. Secondly, the failure of investor protection, such as misreporting, privileged trading access, and poor internal controls, has heightened the conflict-of-interest risk inherent in vested executive arrangements. The consultation paper suggests that segregated leadership should be used to make sure that risk and compliance are not secondary to commercial objectives. Thirdly, risk oversight failures have flagged that accountability under a single MD/DEO often becomes opaque. SEBI analysis concludes that operational priorities can overshadow critical risk posture without bifurcation. These core concerns are reflected in the consultation paper: The regulator directs quarterly meetings barring the MD/CEO, allowing autonomous board-level executives to assess risk and governance concerns without commercial bias. It demands appointment of independent board-level executive directors handling core verticals, one for operations/trading and another for risk/compliance, each with voting rights at the board level and equal standing to the MD. It also institutes a direct reporting channel for SEBI, with the new Executive Directors (Eds) submitting quarterly reports to the board and the regulator. They will meet SEBI’s regulatory/risk committee separately, ensuring transparency and eliminating bottlenecks. By advocating the separation of faces of governance, operational leadership at one end, risk/compliance leadership at the other, autonomous board oversight, and quarterly regulatory interaction, SEBI seeks to eliminate loopholes within internal checks and accountability. This disciplined approach aligns MIIs with worldwide checks & balances practices: independent directors empowered, separation of essential responsibilities, and emphasis on regulatory openness. The outcome is a regulatory structure set to maintain investor confidence, raise risk resilience, and avoid conflicts, without sacrificing the growth and innovation of India’s increasingly complex financial markets. Comparative Governance Lens The MIIs reflect an increasing prioritization of independence and risk mitigation globally, particularly within C-suite leadership roles. The UK’s ring-fencing model stands as a classic example. Since 2019, central UK banks have been required to ring-fence all core retail banking activities from riskier investment banking operations. This architecture demands legal and operational separation and imposes ring-fenced governance structures empowered to act independently, ensuring safeguard of retail banking against plague from the group’s wider exposures. Governance is operationalized through differentiated management teams, board committees, and, crucially, distinct Chief Risk Officer (CRO) roles assigned with autonomous oversight of ring-fenced entities. The CRO is protected from any undue influence by other business segments, reflecting the country’s commitment to functional risk management through structural independence.Similarly, the US markets are subject to tightly controlled dual regulation by federal and state governments, with exchanges being multi-layered and supervised by the Securities and Exchange Commission (SEC) and other organizations. This divided regulatory environment ensures that executive risk functions, such as CROs, are subject to internal checks and external supervision, thus dispersing concentrated power and making the market participants accountable. US exchanges should be required to identify compliance and risk roles with direct reporting lines to independent board committees, further enhancing transparency and responsible risk-taking. Turning to the Indian baseline, SEBI’s existing governance climate already reflects a degree of functional segregation, for instance, by excluding Managing Directors from audit committee chairs. Still, the consultation paper underscores that current practices vest overarching authority in the MD, potentially diluting operational, risk, or compliance oversight. The proposed dual C‑suite mechanism strengthens this segregation by mandating that each ED matches the MD in stature, reports directly to the governing board and SEBI, and is prohibited from holding external board positions beyond narrow exceptions. Expected Benefits v. Practical Challenges The model can potentially change MIIs like stock exchanges, clearing corporations, and depositories. On the positive side, it strengthens in-house checks and inculcates a more focused attention to risk. By keeping one ED to oversee essential operations (trading, clearing, settlement) and another to lead regulatory, compliance, risk management, investor grievance, the structure builds redundancy into the leadership pyramid, bolstering oversight in areas prone to systemic failure. In addition, SEBI’s framework encourages more transparent governance and balanced budgets. EDs will be required to report to Sebi and the governing board every three months resulting in greater board-channel confidence and higher investor trust. With this, the perceptions of investors are likely to improve. MIIs will appear less profit‑motivated and more utility‑led, increasing retail and institutional credibility. This also pre-empts frequent SEBI notices cautioning against over-commercializing MIIs, pointing to increasing dividends and profit margins, by reasserting their public‑utility purpose. That said, ambition could run counter to implementation.

[By Anikait Chawla and Chinmaya Saraswat] The authors are students of Gujarat National Law University On 7 August 2025, the Securities and Exchange Board of India released a consultation paper called, “Proposals for Ease of Doing Business for Investment Advisers and Research Analysts” (the Paper). The Paper aims to lower procedural barriers for advisers and analysts while keeping investor protections in place. It builds on changes from December 2024 that gave advisers more fee flexibility and cleared up onboarding steps. The Paper addresses six persistent market concerns: the limited ability to share past performance, unclear rules on second-opinion services, short corporatization timelines, narrow qualification criteria, and repetitive documentary checks. SEBI tied these easing measures to safeguards such as certification, disclaimers and time limits. The regulator wants to make life easier for advisers while keeping verification where it matters. 1.Regulatory backdrop and principal proposals The Investment Advisers Regulations, 2013 (IA) and the Research Analysts Regulations, 2014 (RA) set rules for who may advise, how research should be published, and what disclosures advisers must make. Those rules helped professionalise a market that had relied on informal practice. As advisory work evolved, the rules showed strain. Firms and solo advisers report repeated documentary checks, academic thresholds that block experienced practitioners, and disruption when individuals convert to a corporate form. Small advisers feel these burdens most because they lack in-house compliance teams. SEBI responds with a significant change aimed at broadening eligibility. Any graduate could register if they pass the relevant NISM exam. That keeps a baseline of competence while allowing more professionals to enter the market. The Paper would permit one-to-one sharing of certified past-performance data when a prospective client requests it. Advisers may present certified results to interested clients, with mandatory disclaimers and a time-limited allowance. The approach lets advisers show a genuine track record without enabling mass-market promotion of unverified returns. The Paper also formalises second-opinion services. Advisers often give informal second opinions on products distributed by others. SEBI would let advisers charge for those services within capped arrangements and with clear disclosure. The Paper references a 2.5 percent ceiling as a guardrail. It also proposes annual consent for ongoing fee arrangements so clients stay informed about layered charges. On corporatization, SEBI proposes a longer transition window and limited client onboarding during conversion. The current short period often forces advisers to pause or alter services. Extending the window, while requiring continued professional-liability cover and client notice, aims to smooth the process without reducing accountability. Additionally, the Paper aims to prune redundant documentary checks. Repeated proofs of address, multiple credit reports and duplicate tax submissions add time and cost without improving oversight. SEBI suggests replacing many routine checks with digital verification, sworn declarations and targeted spot checks. That approach redirects supervisory effort toward risks that matter for investors. Taken together, these measures show SEBI trying to reduce admin friction while keeping guardrails. Certification, templates and sunset clauses serve as those guardrails. The outcome depends on how precise and operable the implementing rules become. 2.Implementation challenges and standardisation requirements The reforms will succeed only if SEBI provides clear technical guidance and reasonable timelines, beginning with standardisation, since past-performance disclosures help clients only when advisers calculate and report returns uniformly.. SEBI should mandate a template that shows one-, three- and five-year gross returns, the corresponding net returns after fees, the benchmark used for each period, start and end dates, and a short note on the calculation method. The template should explain how to treat cash flows and whether to use time-weighted or money-weighted returns. It should also describe how to present multi-asset strategies. Without that clarity, numbers will be hard to compare and easy to manipulate. Verification should remain proportionate, and while chartered-accountant certification provides a strong safeguard, its costs weigh most heavily on small advisers. . SEBI should provide tiered options wherein larger firms can use full certification, mid-sized firms can rely on accredited third-party verifiers or audited internal reports and the small advisers can face random audits or accept higher liability if they self-certify. These alternatives keep oversight while avoiding a one-size-fits-all burden. Record-keeping and consent require fundamental digital systems. To track consent renewals, provide client-specific performance, and maintain auditable records, advisers will require secure solutions. SEBI ought to establish minimal technical requirements and permit gradual adherence. In order to prevent smaller firms from falling behind, the regulator can also promote open-source toolkits and low-cost vendors. Supervisory inspections will be sped up and conflicts will be decreased with the explicit guidelines on encryption, retention periods, and access limits. Digital verification can reduce documentation without compromising oversight. By connecting checks to trustworthy databases like PAN and verified tax records, SEBI can implement a verify-once paradigm. This lessens the need for duplicate checks, but it also necessitates privacy protections, backup plans in case of system failures, and a clear understanding of who is responsible for automated checks that go wrong. Efficiency and safety would be balanced by a hybrid architecture that automates regular inspections and saves manual review for outliers. The chartered-accountant requirement raises timing and cost questions such as who bears the charge and when must certification occur? SEBI could allow phased certification, for example a short self-certification period followed by formal attestation within a defined window, or it could permit accredited data providers to give standard attestations. Both options would maintain verification while easing the burden on small firms. Surveillance and enforcement must match a lighter prescriptive approach. A disclosure-led model needs better detection tools such as sample audits, anomaly detection and proportionate penalties that deter misuse. SEBI should build risk-scoring systems that flag outliers and support those systems with periodic manual checks. Targeted enforcement will keep the regime credible without reverting to blanket paperwork requirements. Finally, continuing competence matters. NISM exams can remain the baseline, but advisers should complete modest annual training and face occasional competency checks. Regular education and random assessments will keep standards current and reduce the risk of persistent low-quality advice. These measures, precise templates, tiered verification,