Chevron Deference Struck Down: End of Regulator as Judge, Jury and Executioner?

Chevron Deference Struck Down: End of Regulator as Judge, Jury and Executioner?

Chevron Deference Struck Down: End of Regulator as Judge, Jury and Executioner? July 11, 2004 Authors: Sidharth Kumar & Shivam Yadav What? The United States Supreme Court has struck down a doctrine of administrative law known as “Chevron deference” in Loper Bright v. Raimondo, by a majority of 6-3 The doctrine held that federal courts should defer to a regulator’s interpretation in a dispute over an ambiguous law With the overruling of Chevron, courts will now revert to the older doctrine of “Skidmore deference” which reduces the weightage given to the regulator’s view of the law, and requires the courts to take a more hands-on approach The interpretation will also be subject to the recently defined “Major Questions Doctrine” which creates a presumption that the legislature does not delegate to the executive any power to decide on issues of major political or economic significance Bottom Line The ruling is likely to have a significant impact on environmental regulations and the fight against climate change, along with the regulators for labour and health, and the SEC The striking down of the Chevron Deference comes just a day after another significant ruling in SEC vs Jarkesy, which also raised important questions about the extent of power that can be exercised by regulators under broadly worded skeletal laws In SEBI vs Mega Corporation Ltd., the Indian Supreme Court relied on a quasi-judicial body’s interpretation, holding that “Not every interpretation of the law would amount to a question of law. This freedom to evolve and interpret laws must belong to the Tribunal to subserve the Regulatory regime for clarity and consistency” Courts in India have generally deferred to the regulator on matters of regulatory ambiguity. If Indian courts were to follow the US, the general approach to defer to regulator’s interpretation is likely to stand diluted Recent Research View All ➝ The Road To Take-Private In India: What’s The Most Efficient Route For Deal-Making? Read More ➝ IPO-Bound Companies: SEBI Sees Private Equity’s POV Read More ➝ Telangana High Court’s GAAR Ruling: Much Ado About Nothing?   Read More ➝ Indian HNI investments into offshore funds – RBI addresses industry concerns Read More ➝ The Road To Take-Private In India: What’s The Most Efficient Route For Deal-Making? Read More ➝ 1 2 3 4 5 Leave a Comment Cancel reply Logged in as admin. Edit your profile. Log out? Required fields are marked * Message* Δ

IPO-Bound Companies: SEBI Sees Private Equity’s POV

IPO-Bound Companies: SEBI Sees Private Equity’s POV

IPO-Bound Companies: SEBI Sees Private Equity’s POV June 27, 2024 Authors: Anirudha Sapre & Payaswini Upadhyay What? SEBI, in an advisory to merchant banks, has allowed for investor protection rights of a shareholder (such as board seat, veto, pre-emptive rights etc) to continue till the company is listed SEBI’s earlier advisory [dated May 29] required removal of these rights from the contract and charter documents of the company before the updated DRHP (UDRHP) is filed Investors were exposed to a scenario of holding their investment without these customary protections, if the company eventually fails to list after filing of UDRHP Once annulled, these special rights can be restored into the charter only through a special resolution Bottom Line SEBI’s reversal comes on the back of market feedback, which stressed on the need for maintenance of these rights till the date of listing Spring-back provisions in certain investor agreements provided for automatic resuscitation if listing didn’t materialise. However, enforceability of these provisions remained questionable SEBI’s reversal provides relief to PE investors, who can now hold and exercise these minority protection rights without the stress of IPO uncertainty Also relevant to note that SEBI has allowed for board rights and certain inter-se economic shareholder restrictions (such as ROFO etc) to survive post listing in the past, which could become difficult going forward Recent Research View All ➝ IPO-Bound Companies: SEBI Sees Private Equity’s POV Read More ➝ Telangana High Court’s GAAR Ruling: Much Ado About Nothing?   Read More ➝ Indian HNI investments into offshore funds – RBI addresses industry concerns Read More ➝ RBIs draft lending norms – how big will the impact be on infra projects? Read More ➝ IPO-Bound Companies: SEBI Sees Private Equity’s POV Read More ➝ 1 2 3 4 5 Leave a Comment Cancel reply Logged in as admin. Edit your profile. Log out? Required fields are marked * Message* Δ

Shadow trading – a new chapter in Insider Trading? Learnings from US SEC

Shadow trading – a new chapter in Insider Trading? Learnings from US SEC

  • In a novel case of Shadow Trading, California District Court held that MNPI about
    one company could count as MNPI for another company if they are economically
    linked
  • What is Shadow Trading? What is the concept of economically linked entities? How
    is international jurisprudence…
SEBI is slowly re-defining InvITs: What’s at risk for the product and its institutional audience?

SEBI is slowly re-defining InvITs: What’s at risk for the product and its institutional audience?

  • Strong minority unitholder protections introduced – for both public and private InvITs
  • Private InvITs originally designed to attract large institutional capital – light touch re- gulations allowed flexibility to parties to manage their arrangements…
Blurring lines between FPI and FDI: Can foreign investors really acquire less than 10% listed stake off market?

Blurring lines between FPI and FDI: Can foreign investors really acquire less than 10% listed stake off market?

  • Investors face roadblocks in picking up less than 10% listed stake off the market under the FDI route
  • The shift from an investor-centric to investment-centric regime has been rather mismanaged, leading to divergent market practices…
EduInfra  – Emergence of a new asset class

EduInfra – Emergence of a new asset class

  • EduInfra offers a promising 10 – 11% entry cap rate for annuity investors with rental escalations in the region of 3
    – 5%

  • Infrastructure classification allows for tax optimal exit through InvITs
  • Seller awareness needed – operators slowly moving towards asset light models; depth, but potential…
Investor or developer? Real estate regulator (RERA) classifies real estate fund as a promoter

Investor or developer? Real estate regulator (RERA) classifies real estate fund as a promoter

  • The term ‘causes to construct’ in the definition of ‘promoter’ under RERA has been interpreted to include private funds exercising rights typical to such investments

  • Protective rights of investors have been interpreted as being secondary to the rights of the homebuyers – in a conflict, the latter should be protected, notwithstanding inter-se contractual relationship between developer and fund…
Revamped Overseas Investment Regime (Part II) – Overseas Debt Investments Rationalized

Revamped Overseas Investment Regime (Part II) – Overseas Debt Investments Rationalized

  • Control threshold introduced for offshore debt – a shift of focus towards strategic growth
  • Offshore private credit and special situation funding now permitted
  • Debenture trustee’s introduced to encourage offshore funding to an Indian entity…
Revamped Overseas Investment Regime (Part I) – A Rational Overhaul

Revamped Overseas Investment Regime (Part I) – A Rational Overhaul

  • Round tripping no longer illegitimate – doors open for externalisation and de-SPAC transactions
  • Definitional clarity on direct investments and portfolio investments
  • Indian GPs get a glidepath to setup offshore pooling structures…
Denial of tax treaty benefits: Blueprinting defence strategies for PE funds – A tax litigation perspective

Denial of tax treaty benefits: Blueprinting defence strategies for PE funds – A tax litigation perspective

  • Revenue has issued reassessment orders to several global PE/VC funds denying
    tax treaty benefits to grandfathered investments alleging treaty shopping through Mauritius and Singapore between AY 2013-14 and 2015-16

  • Substantial tax, interest, and penalty has been levied invoking judicial anti-avoidance principles based on a supposed lack of commercial substance in these jurisdictions…
Evolving Negotiation Strategies in Late-Stage PE Investments

Evolving Negotiation Strategies in Late-Stage PE Investments

Private equity (PE) investments into India are at an all-time high, with more than $11 billion invested by PE funds in 2017. The keenness now is more towards late-stage companies as compared to growth and venture investments. Fund raising by these late-stage companies has also become sophisticated, with many founders opting to run a bid process, on the back of a proven track record of performance and ethics…

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