Sebi norm on profit-sharing puzzles firms

Norms issued by the Securities and Exchange Board of India (Sebi) on profit-sharing agreements have forced companies to seek clarifications.

Around six companies have sought informal guidance over applicability of the provisions in various situations. 

An informal guidance is a method for entities to seek interpretation from the market regulator on any regulation, circular or guideline. Although Sebi acts in accordance with an informal guidance, it is not a binding obligation.

Legal experts say there are many grey areas in the circular issued by Sebi in November last year to curb profit-sharing arrangements, which are typically side-deals between the managements