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ARTICLE · 10 JANUARY 2017

SEBI Regulates Upside Sharing Arrangements

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SEBI has been keen to address corporate governance issues arising out of private compensation and profit sharing arrangements offered to promoters or key managerial personnel...

IndiaCorporate/Commercial Law
Aakash Choubey
Aakash Choubey
Srikanth Mantravadi
Srikanth Mantravadi
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BACKGROUND

The Securities and Exchange Board of India (SEBI) has been keen to address corporate governance issues arising out of private compensation and profit sharing arrangements offered to promoters or key managerial personnel (KMP) of listed companies following profitable exits by investors (Upside Sharing Agreements).

In this context, after seeking public comments, on 23 November 2016, the SEBI approved an amendment to Regulation 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations), by the insertion of Regulation 26(6). This amendment was recently notified on 4 January 2017.

KEY TAKEAWAYS OF THE UPSIDE SHARING REGULATION

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