May 04th, 2026

[A] Circulars / Notifications / Informal Guidance / Press Release

[A.1] All You Need to Know About PaRRVA: SEBI’s New Performance Watchdog

Transparency in the Indian securities market has reached a new milestone with the operationalisation of the Past Risk and Return Verification Agency (PaRRVA). Effective May 4, 2026, this initiative by SEBI aims to eliminate misleading claims regarding investment performance.

What is PaRRVA? PaRRVA is a specialised body designed to independently verify the past performance claims made by investment advisers (IAs) and research analysts (RAs). CARE Ratings Limited has been recognised as the first agency, supported by the National Stock Exchange (NSE) acting as the data centre.

Why does it matter? Investors can finally rely on certified data rather than self-reported figures. It provides a uniform framework for measuring risk and return metrics.

IAs and RAs must enrol by August 3, 2026, to continue sharing performance data. By May 2028, only PaRRVA-verified data will be permitted in client communications.

For investors, this means a safer, more informed decision-making process. For professionals, it’s an opportunity to build credibility through rigorous, third-party validation.

[A.2] Conversion of Warrants into Equity Shares by its Promoters can Trigger Open Offer Obligation under Takeover Code

SEBI issued an interpretative letter dated December 12, 2025, addressing a request from Ambo Agritec Limited regarding the conversion of equity share warrants by its promoter, Mr. Umesh Kumar Agarwal, and the resulting implications under the SAST (Substantial Acquisition of Shares and Takeovers) Regulations.

In FY 2024-25, the company issued 1.43 crore warrants. The promoter (Mr. Agarwal) was allotted 90 lakh warrants, while the public received 53 lakh warrants. By August 12, 2025, the promoter had already converted a portion of his warrants, resulting in a gross acquisition of 4.95% in the current financial year (FY 2025-26). The promoter intended to convert his remaining 38.5 lakh warrants before the expiry date of December 19, 2025.

The central issue was whether this final conversion would trigger an obligation to make an open offer under the creeping acquisition limits.

Under Regulation 3(2) of the SAST Regulations, an acquirer holding more than 25% but less than the maximum permissible non-public shareholding cannot acquire more than 5% of voting rights within a single financial year without making a public announcement for an open offer. SEBI emphasised that the 5% limit is calculated on a gross basis. This means any intermittent sale of shares (like the 10.61 lakh shares the promoter sold in the open market) does not reset or offset the acquisition limit. And since the promoter had already acquired 4.95% in FY 25, converting the remaining warrants would push his total acquisition for the year to 7.37%.

Thus, SEBI concluded that the proposed conversion would breach the 5% limit. Consequently, if the promoter proceeds with the conversion of the remaining 38.5 lakh warrants in the current financial year, he must make a public announcement of an open offer as per the SAST Regulations.

[B] Case Laws

[B.1] Admission of a claim by a resolution professional does not Reset the Clock for the limitation period

In the recent ruling of Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd., the Supreme Court of India clarified a critical intersection between the Insolvency and Bankruptcy Code (IBC) and the Limitation Act.

The case centred on whether the admission of a debt by an interim resolution professional (IRP) constitutes an acknowledgement of liability that extends the three-year limitation period for filing insolvency. The Court noted that the corporate debtor’s account was declared an NPA in 2016, but the IRP only admitted the claim in 2022.

The bench ruled that an IRP’s role is purely administrative. The IRP is collating claims rather than adjudicating them, and thus, their admission is a mere recital of debt, not a conscious acknowledgement of liability.

For businesses and legal practitioners, this decision is a vital reminder that the date of default remains the primary trigger for the three-year limitation period. Companies cannot rely on a subsequent insolvency process to revive stale or time-barred claims. This reinforces the need for creditors to be proactive in initiating recovery or insolvency proceedings within the original three-year window from the date of NPA classification.

[B.2] Illegal Diversion of Share Allotment Proceeds Cannot be Cured by post-facto ratification of shareholders

In the landmark case of SEBI v. Terrascope Ventures Ltd., the Supreme Court of India overturned a Securities Appellate Tribunal (SAT) order, reinforcing the sanctity of objects of the issue.

The company had raised approximately ₹15.88 crores through a preferential allotment, ostensibly for capital expenditure and working capital. Instead, it immediately diverted these funds into loans and share investments. Years later, after SEBI initiated action, the company obtained a shareholder resolution to ratify this change in fund utilisation.

The Supreme Court ruled that such subsequent ratification is legally invalid for plainly illegal acts that impact the broader market and public interest.

This judgement is a stern warning for corporate boards that shareholder approval is not an exemption card for misusing raised capital. From a business and law perspective, the ruling elevates objects of the issue from mere disclosure to a binding commitment. Investors rely on these disclosures to value the company and assess risk; allowing retrospective changes would undermine market transparency. For legal practitioners, it settles a critical debate that diversion of funds is a fraudulent practice under SEBI (PFUTP) regulations that cannot be waived or ratified, ensuring that companies remain strictly accountable to their original promises.

[B.3] Media Leak Obligations: Interplay Between Unpublished Price Sensitive Information and Disclosure of Material Events

In the case of Reliance Industries Ltd. v. Securities and Exchange Board of India, the Supreme Court of India upheld a ₹30 lakh penalty against the company for failing to promptly disclose negotiations with Facebook regarding a stake in Jio Platforms.

Despite having a signed confidentiality agreement and a non-binding term sheet, a news report in the Financial Times caused a 15% spike in share price. The company remained silent until the deal was finalised weeks later.

The Court affirmed that under SEBI (LODR) and Insider Trading Regulations, companies have a statutory duty to provide prompt public disclosure of unpublished price-sensitive information (UPSI) as soon as credible news enters the public domain, even if the deal is not yet certain.

This ruling fundamentally shifts the burden for listed entities. Relying on confidentiality as a shield against disclosure is insufficient once a leak impacts market price discovery. For business leaders and legal practitioners, it is clear that the moment a media report triggers significant price volatility, the information is no longer unpublished. To avoid regulatory scrutiny and heavy penalties, companies must be prepared to confirm, deny, or clarify market rumours immediately. In the digital age, market integrity now takes precedence over a deal’s private timeline.

[B.4] Motherhood Over Biology: Supreme Court Strikes Down Age Limit for Adoption Benefits under Social Security Code

The Supreme Court of India, in Hamsaanandini Nanduri v. Union of India, has fundamentally redefined maternity rights by striking down the three-month age limit for adopted children under the Social Security Code, 2020.

Previously, Section 60(4) restricted maternity benefits only to mothers adopting infants younger than three months.

The Court found the provision to be illusory given the lengthy legal timelines required to declare a child free for adoption. The ruling clarifies that the right to reproductive autonomy under Article 21 includes adoption and that the law must prioritise the process of motherhood over the biological act of birth.

For businesses and legal practitioners, this necessitates an immediate update to HR policies and compliance frameworks. Companies must now provide a standard twelve weeks of maternity benefit to all legal adoptive mothers, regardless of the child’s age, ensuring equitable support for family integration and the best interests of the child.

References:

A.1 - SEBI Press Release dated April 29th, 2026.

A.2 - SEBI Informal Guidance dated December 12th, 2025.

B.1 - Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd, April 29th, 2026, Supreme Court.

B.2 - SEBI v. Terrascope Ventures Ltd., (2026) 192 SCL 416 (SC).

B.3 - Reliance Industries Limited v. SEBI, (2026) 191 SCL 361 (SC).

B.4 - Hamsaanandini Nanduri v. Union of India, March 17th, 2026, Supreme Court.