Global Capital Markets
Show Less

Global Capital Markets

A Survey of Legal and Regulatory Trends

Edited by P. M. Vasudev and Susan Watson

This topical volume examines key developments in the law regulating capital markets, drawing on examples from around the world – including United States, Canada, Europe, China, India, and New Zealand. With perspectives from international scholars, chapters look at current issues including the regulation of crowdfunding, efforts in Europe for shareholder empowerment, hedge fund activism in Canada, international regulatory cooperation, and regulation of corporate governance in China through securities law rules.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 7: Regulating equity crowdfunding in India: walking a tightrope

Arjya B. Majumdar and Umakanth Varottil

Abstract

Start-up companies face difficulties in raising finances, and the situation has intensified since the Global Financial Crisis in 2008. As a result, crowdfunding has made its appearance as an attractive alternative capital-raising mechanism, harnessing technology (primarily the Internet) to access funding from the ‘crowd’. This chapter explores the core question of how equity crowdfunding should be regulated in a manner that both enhances its appeal to engender the development of small and new-age businesses through accessible funding opportunities, and at the same time protects investors against undue risks, such as fraud, which arise from the activity. The chapter analyses the regulatory conundrum on equity crowdfunding by examining the legal regime for crowdfunding in India. The rules relating to fund-raising by companies in India have been considerably tightened under the Companies Act, 2013, which limits crowdfunding activity. However, the Securities and Exchange Board of India (SEBI) has issued a consultation paper in 2014, Consultation Paper on Crowdfunding in India, that proposes a framework for ushering in crowdfunding in India. The chapter finds that the unduly onerous conditions imposed by SEBI have the effect of deterring rather than promoting the growth of crowdfunding. The existing (and proposed) legal framework in India has erred on the side of caution and sought to emphasize investor protection more than engendering the market for crowdfunding. Keywords: • India crowdfunding • SEBI Consultation Paper 2014 • Investor protection • Sahara India Supreme Court ruling • Accredited investors • Qualified Institutional Buyers

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.