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Monday, December 28, 2009

SEBI ICDR now applies to Convertible preference shares, fast track issues liberalised, employee reservation value limited to Rs. 1 lakh, Anchor Investors in IDR & new book building system introduced based on bids at highest price

No. LAD-NRO/GN/2009-10/23/186926 dated 11th December 2009

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2009 [SEBI ICDR Amendment]

Reg 2(k) “convertible security” means a security which is convertible into or
exchangeable with equity shares of the issuer at a later date, with or without the option of the holder of the security and includes convertible debt instrument and convertible preference shares.

Reg 2(zd) “Qualified Institutional Buyer” (QIB) has 11 items now:

“(xi) insurance funds set up and managed by army, navy or air force of
the Union of India;”

Fast Track Issues – FTI

  • Reg 10(b): The average market capitalisation of public shareholding of the issuer is at least five thousand crore rupees (thus reduced to Rs.5,000 crores from erstwhile Rs.10,000 crores).
  • Reg 10(b): the annualised trading turnover of the equity shares of the issuer during 6calendar months immediately preceding the month of the reference date has been at least 2% of the weighted average number of equity shares listed during such 6 months’ period. 
    • Provided that for issuers, whose public shareholding is less than 15% of its issued equity capital, the annualised trading turnover of its equity shares has been at least 2% of the weighted average number of equity shares available as free float during such 6 months’ period.
  • Reg 10(e): the issuer has been in compliance with the equity listing agreement for a period of at least 3 years immediately preceding the reference date.
    • Provided that if the issuer has not complied with the provision of the equity listing agreement relating to composition of board of directors, for any quarter during the last 3 years immediately preceding the reference date, but is compliant with such provisions at the time of filing of offer document with the Registrar of Companies (RoC) or designated stock exchange, as the case may be, and adequate disclosures are made in the offer document about such non-compliances during the 3 years immediately preceding the reference date, it shall be deemed as compliance with the condition.

Reg 29: An issuer may offer specified securities at different prices, subject to the following: [Differential Pricing]
(a) retail individual investors or retail individual shareholders or employees of the issuer entitled for reservation (on competitive basis) made under regulation 42 making an application for specified securities of value not more than 1 lakh rupees may be offered specified securities at a price lower than the price at which net offer is made to other categories of applicants: Provided that such difference shall not be more than ten per cent. of the price at which specified securities are offered to other categories of applicants.

Reg 42(4): The reservation on competitive basis shall be subject to following conditions:
(a) the aggregate of reservations for employees shall not exceed 5% of the post issue capital of the issuer [not the erstwhile 10% of issue size].

Also, a new Clause is inserted as:

“(g) value of allotment to any employee in pursuance of reservation made under sub-regulations (1) [reservations when issue made through book building] or (2) [reservations when issue made through OTHER THAN book building], as the case may be, shall not exceed 1 lakh rupees.”

Reg 50: Allotment procedure and basis of allotment.
(1) The allotment of specified securities to applicants other than anchor investors shall be on proportionate basis within the specified investor categories and the number of securities allotted shall be rounded off to the nearest integer, subject to minimum allotment being equal to the minimum application size as determined and disclosed by the issuer.

“Provided that value of specified securities allotted to any person in pursuance of reservation made under clause (a) of sub-regulation (1) or clause (a) of sub-regulation (2) [ie, to employees of issuer] of regulation 42, shall not exceed 1 lakh rupees.”

New Clause: Regulation 55A in Rights Issue: Reservation for employees alongwith rights issue:
55A. Subject to other applicable provision of these regulations the issuer may make reservation for its employees alongwith rights issue subject to the condition that value of allotment to any employee shall not exceed 1 lakh rupees.


IDR Amendments

Out of the portion to Qualified Institutional Buyer (QIB), UPTO 30% to Anchor Investors (AI) as per Schedule XI. Allocation to AI shall be made on same day of bidding. AI shall be,

2 or more, if allocation is

UPTO 250 crores

5 or more, if allocation is

ABOVE 250 crores

UPTO 1/3rd of AI portion is reserved for domestic Mutual Funds (MF).


Reg 98: Condition for issue of IDR:

(e) The balance 50% may be allocated among the categories of non-institutional investors and retail individual investors including employees at the discretion of the issuer and the manner of allocation shall be disclosed in the prospectus. Allotment to investors within a category shall be on proportionate basis;

“Provided that atleast 30% of the said 50% IDR issued shall be allocated to retail individual investors and in case of under subscription in retail individual investor category, spill over to the extent of under-subscription shall be permitted to other categories.”

Schedule VIII dealing with DISCLOSURES IN OFFER DOCUMENT, ABRIDGED PROSPECTUS AND ABRIDGED LETTER OF OFFER is amended and in specific cases of this Schedule, the regulations will be implemented w.e.f. 1st January & 1st April 2010.

[See regulation 28(3) and 102]

The following Paragraph is newly inserted:

Alternate method of book building

(may be inspired from French Auction.  In case of Dutch Auction, allotments made at single price (like the existing book building process). In case of French Auction, allotments made at bid price)

In case of further public offers, the issuer may opt for an alternate method of book building, as given in this part subject to the following:
(a) Issuer shall follow the procedure laid down in Part A of this Schedule except clause (13) [determination of price] and clause (15) (a) [proportionate allotment] thereof.
(b) The issuer shall disclose a floor price in the red herring prospectus.
(c) Investors other than retail individual investors shall bid at any price above the floor price.
(d) The bidder who bids at the highest price shall be allotted the number
of securities that he has bided for and then the bidder who has bided at the second highest price and so on, until all the specified securities on offer are exhausted.
(e) Allotment shall be on price priority basis for investors other than retail individual investors.
(f) Allotment to retail individual investors shall be made proportionately as illustrated in this Schedule.
(g) Where, however the number of specified securities bided for at a price is more than available quantity (HEAVY DEMAND), then allotment shall be done on proportionate basis.
(h) Retail individual investors shall be allotted specified securities at the floor price.
(i) The issuer may place a CAP either in terms of No. of specified securities or % of issued capital of the issuer that may be allotted to a single bidder.”

Download SEBI (ICDR) Regulations, 2009 amended as till year 2009.

Monday, December 21, 2009

FII debt allocation through bidding process and first come first serve process - SEBI

This is in continuation of SEBI FII notification regarding allocation of debt investment limits vide [SEBI]FII allocation of government debt investment limit&link to FII section in SEBI website

Allocation through bidding process

In partial amendment to clause 3 (h) of the aforesaid circular IMD/FII & C/ 37/2009, no single entity shall be allocated more than Rs.300 cr. of the government debt investment limit.

In partial amendment to clause 3 (c) and 3(d) of the earlier circular, the minimum amount which can be bid for shall be Rs.50 cr. and the minimum
tick size shall be Rs.50 cr.

The bidding process shall be on December 17, 2009 on the Bombay Stock Exchange (BSE).

Allocation through first come first serve process
An investment limit of Rs.350 cr. in Government debt shall be allocated among the FIIs/sub-accounts on a first come first served basis in terms of SEBI circular dated January 31, 2008, subject to a ceiling of Rs.50 cr. per registered entity.

The debt requests in this regard shall be forwarded to the dedicated email id The window for first come first served process shall open at 23:59 PM IST, December 17, 2009. Time period for utilization of the allocated debt limit through first come first served basis shall be 11 working days from the date of the allocation.

Source: Cir No. IMD/FII & C/41/2009 dated 15th December, 2009

No NOC while changing MF Distributor, additional open ended plans as addendum or scheme, revised timelines, investor documents to be maintained by AMC – SEBI Circular

I. Sub: AMFI Guidelines for change of mutual fund distributor vide SEBI/IMD/CIR No./ 13/187052 /2009 dated 11th December 2009

It has come to the notice of SEBI that unwarranted hardship (like mandating No Objection Certificate - NOC) is being caused to investors in mutual fund schemes who wish to switch from an existing mutual fund distributor to
either another mutual fund distributor or opt to deal direct.


Now, Mutual Funds (MFs) and Asset Management Companies (AMCs) are advised to ensure compliance with the instruction of the investor informing his desire to change his distributor and / or go direct, without compelling that investor to obtain an NoC from the existing distributor.


II. Sub: Modifications in the existing SEBI circulars for Mutual Funds vide SEBI / IMD / CIR No 14 / 187175/ 2009 dated 15th December 2009

Over the years, certain circulars/ guidelines have been revised in line with the requirements of investor protection, market development or effective regulation. In continuation of the effort and in consultation with AMFI, modifications in following existing circulars have been carried out (For modification(s), please refer Annexure I):

The modifications are highlighted hereunder,

  1. Asset Management Companies (AMCs) to dispatch dividend warrants within 30 days of the declaration of the dividend.It is clarified that, in the event of failure of dispatch of dividend within the stipulated 30 day period, the AMC(s) shall be liable to pay interest @ 15% per annum to the unit holders.  Further, a STATEMENT OF INTEREST PAID TO THE INVESTORS FOR DELAYS IN DESPATCH OF DIVIDEND shall be sent to SEBI with Compliance Test Reports.
  2. Valuation of collateral securities under Participation by MF in Stock lending scheme will be prescribed by SEBI.
  3. The AMCs shall maintain records of dispatch of the letters to the unitholders giving them the option to exit at prevailing NAVs without exit loads and the responses received from them and shall be filed with SEBI within 21 days from the closure of Exit Option.
  4. Additional plans sought to be launched under existing open ended scheme can be issued as an ADDENDUM, but if it has a substantially different characteristic, it shall be issued as a separate SCHEME.
  5. Time periods are shortened.
  6. All other provisions of the aforesaid SEBI circulars remain unchanged, where applicable. These modifications shall be applicable from the date of issue of this circular.

III. Sub: Transactions through some mutual fund distributors and compliance with the SEBI circular on AML vide SEBI/IMD/CIR No.12 /186868 /2009 dated 11th December 2o09

It has recently come to our attention that all documentation related to the investor including Know your Client, Power of Attorney (PoA) in respect of transactions/requests made through some mutual fund distributors is not available with the AMC/RTA of the AMC and that the same is stated to be maintained by the respective distributors.

In view of the above, we reiterate that the requirements as mentioned in the master circular ISD/AML/CIR-1/2008 dated December 19, 2008 issued by SEBI is applicable to the Mutual Funds/ AMCs and hence maintaining all the documentation pertaining to the unitholders/investor is the responsibility of the AMC.

Thus, all MF and AMCs are advised to confirm whether all the investor related documents are maintained/ available with them. If not, and to the extent of and relating to such investor accounts/folios where investor related documentation is incomplete/inadequate/not available, then the trustees of the mutual funds are advised to ensure the following:
a. No further payment of any commissions, fees and / or payments in any other mode should be made to such distributors till full compliance/ completion of the steps enumerated herein.
b. Take immediate steps to obtain all investor/ unit holders documents in terms of the AML/ CFT, including KYC documents / PoA as applicable
c. Take immediate steps to obtain all supporting documents in respect of the
past transactions.
d. On a one time basis, send statement of holdings and all transactions since
inception of that folio in duplicate to the investor and seek confirmation from
the unit holders on the duplicate copy.
e. Set up a separate customer services mechanism to handle/ address queries and grievance of the above mentioned unitholders.

Pending completion of documentation, exercise great care and be satisfied of
investor bonafides before authorizing any transaction, including redemption, on such accounts / folios.

The trustees shall forthwith confirm to SEBI that the steps have been taken to address the above and also send a status to SEBI as and when process is
completed to satisfaction.

SEBI Clarification on preservation & maintenance of records of intermediaries taken during Investigation by enforcement agency

MRD/DoP/DEP/Cir- 20 /2009 & MRD/DoP/SE/Cir- 21 /2009 dated 9th December 2009

Re: SEBI (Depositories and Participants) Regulations, 1996 (which mandates preservation of records for 5 years), Securities Contracts (Regulation) Rules, 1957 (stock exchange to preserve records for 2 – 5 years) and SEBI (Stock Brokers & Sub-brokers) Regulations, 1992 (which mandates preservation of records for 5 years).

It is clarified that if a copy of such record is taken by enforcement agency like CBI, Police, Crime Branch etc. during the course of investigation, either from physical or electronic record then the respective original is to be maintained till the trial or investigation proceedings have concluded.

Friday, December 11, 2009

ECB NBFC & Spectrum amended w.e.f December 2009 & others applicable from 1st January 2010 – RBI FEMA Notification

On a review of the prevailing macroeconomic conditions and developments in international financial markets, it has been decided to modify some aspects of the ECB policy as indicated below:


(i) ECB for the NBFC Sector

As per the current ECB norms, Non-Banking Finance Companies (NBFCs), which are exclusively involved in the financing of the infrastructure sector, are permitted to avail of ECBs from multilateral / regional financial institutions and Government owned development financial institutions for on-lending to the borrowers in the infrastructure sector under the approval route.  In view of the thrust  given to development of infrastructure sector, it has been decided with immediate effect to allow NBFCs exclusively involved in financing the infrastructure projects to avail of ECB from the recognized lender category including international banks under the approval route, subject to complying with the prudential standards prescribed by the Reserve Bank and the borrowing entities fully hedging their currency risk. The AD Category-I bank should certify the compliance with the prudential norms by the borrowing NBFCs.

(ii) ECB for Spectrum in the Telecommunication Sector

As per the extant policy, as indicated in A.P. (DIR Series) Circular No. 26 dated October 22, 2008, payment for obtaining license/permit for 3G Spectrum is considered an eligible end - use for the purpose of ECB under the automatic route. It has now been decided to permit eligible borrowers in the telecommunication sector to avail of ECB for the purpose of payment for Spectrum allocation. This modification will come into effect with immediate effect.


(i) All-in-cost ceilings

As per the extant policy, the all-in-cost ceilings have been dispensed with, under the approval route, until December 31, 2009. In view of the improvement in the credit market conditions and narrowing credit spreads in the international markets, it has been decided to withdraw the existing relaxation in the all-in-cost ceilings under the approval route with effect from January 1, 2010. Accordingly, the all-in-cost ceilings under the approval route for the ECBs, where Loan Agreements have been signed on or after January 1, 2010 will be as under:

Average Maturity Period All -in-cost Ceilings over six month Libor*
3 – 5 years 300 basis points
Over 5 years 500 basis points

*for the respective currency of borrowing or applicable benchmark.

Eligible borrowers proposing to avail of ECB after December 31, 2009, where the Loan Agreement has been signed on or before December 31, 2009 and where the all-in-cost exceed the above ceilings, should furnish a copy of the Loan Agreement. Such proposals would continue to be considered under the approval route.

(ii) Integrated township

As per the extant policy, corporates, engaged in the development of integrated township, as defined in Press Note 3 (2002 Series) dated January 04, 2002, issued by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India are permitted to avail of ECB, under the approval route, until December 31, 2009. On a review of the prevailing conditions, it has been decided to extend the current policy until December 31, 2010, under the approval route. All other terms and conditions, stipulated in the A.P. (DIR Series) Circulars referred to above, remain unchanged.

iii) Buyback of the Foreign Currency Convertible Bonds (FCCBs)

In terms of A.P. (DIR Series) Circular No. 39 dated December 8, 2008, read with A.P. (DIR Series) Circular No. 58 dated March 13, 2009 and A.P. (DIR Series) Circular No. 65 dated April 28, 2009, Indian companies have been allowed to buyback their Foreign Currency Convertible Bonds (FCCBs) both under the automatic route and approval route until December 31, 2009. Keeping in view the prevailing macroeconomic conditions and global developments, especially the improvements in the stock prices, it has been decided to discontinue the facility with effect from January 1, 2010.

Source: RBI/2009-10/252 A.P. (DIR Series) Circular No.19 dated 9th December 2009

Thursday, December 10, 2009

Consumer Protection & MRTP cases for CS Executive Program/Final exams, interesting read and All the best for December exams 2009

For the world, its the expectation of Christmas week & the New Year Celebrations!!! (but for the blessed few: those who are appearing for Company Secretary exams).

CS Final (Old Syllabus) and CS Executive Program Students do read the recent Economic Law cases as compiled by Mr. Ankur Garg and published here:

Yehseeyes wishes all the very best for your December 2009 exams.  As of now, forget other things, just remember the following,

  1. Read again what you have read before (called as Revision) which is a must to remember atleast something.
  2. Fear not for the exams.  Be confident as it is supposed to be faced that way!
  3. Have your Hall Ticket, you can take prints also from the link and then click “Admit Card Extract Link”, which also requires you to register with (take print & keep spare copy to avoid last minute misplacement).
  4. Keep ready smart writing pens.  Never go for fancy colour inks.  Blue is excellent, at places and rarely you may add it up with Black.
  5. Focus on the Questions more in the exam.  Whether it is law or issues or problems, it requires lot of understanding before giving the solutions. 

Its Only This Much.  Hi Only This Much book readers for Company Secretary exams, waiting for your constructive feedbacks ( to make CS studies more exciting.

Again wishing you all the best!!! Finish the exams and then we will discuss, what next!!! forget the world, its your exams now…

Monday, December 7, 2009

Manufacturing Enterprise is same as Industry or Industrial Undertaking (SSI) as the Act uses enterprise for both manufacturing & service – MSME Clarifies

The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) uses the terminology enterprise for the establishments engaged in manufacturing sector as well in service sector.  Therefore, the present terminology “manufacturing enterprise” should be considered as equivalent to the term “industry” or industrial undertaking”, which was used earlier in the definition of Small Scale Industries (SSI).  The establishment engaged in services are termed as “Service Enterprises” in the MSMED Act, 2006.

Source: 16(20)/1/2009-MSME POL dated 5th November 2009

As you know [MSMED]Small Scale Industry definition only under MSMED Act for IDRA too.

To understand all the notifications of industry, read Industries DIPP updates

Now, read in mail Subscribe to Blog

Tuesday, December 1, 2009

NFE shall be calculated in rupees for SEZ unit approval, fluctuations may be considered, if negative – Ministry Clarification

F.No.C.6/9/2009-SEZ dated November 2009 under Ministry of Commerce & Industry as Instruction No. 41

Sub: Clarification on calculation of NFE as per Rule 53 of the SEZ Rules, 2006

  • It is hereby clarified that Net Foreign Exchange (NFE) is to be calculated in rupee terms only.
  • In case a unit is NFE negative and claims that it is due to foreign exchange fluctuation, the Approval Committee may consider such cases provided that the unit gets the computations certified by the Authorised Bank, on a case to case, basis.

NOC to release 1% issue amount in SEBI circular and not in DIP/ICDR regulations now, application after 4 months of listing with 2 months for bank guarantee

SEBI - OIAE/Cir-1/2009 dated November 25, 2009

Sub: Issue of No Objection Certificate for release of 1% of issue amount

As per the Listing Agreement with the Stock Exchanges, the issuer company
deposits 1% of the issue amount of the securities offered to the public and/or to the holders of the existing securities of the company, as the case may be, with the designated stock exchange. This amount was being released to issuer companies after obtaining a No Objection Certificate (NOC) from SEBI in accordance with the SEBI (Disclosure and Investor Protection - DIP) Guidelines, 2000.  However, the same provisions had not been found in the amended SEBI (ICDR) Regulations, 2009 which has replaced DIP.  Hence, this circular is issued.

For the purpose of obtaining the NOC, the issuer company shall submit an application on its letter head addressed to SEBI in the format specified in Annexure – A, after lapse of 4 months from listing on the Exchange which was the last to permit listing. The application shall be filed by the post issue lead merchant banker with the concerned designated office of SEBI under which the registered office of the issuer company falls, as specified in Annexure – B. On the date of application, the bank guarantees, if any, included in 1% deposit must have a residual validity of at least 2 months.

SEBI shall issue the NOC after satisfying itself that the complaints arising from the issue received by SEBI against the Company have been resolved to its satisfaction, the Company has been submitting monthly Action Taken Reports on the complaints forwarded by SEBI to the company as per the proforma specified in Annexure – C, and the fees due to intermediaries associated with the issue process including ASBA Banks have been paid.

Debt Listing Agreement amendment & clarification requires Equity Listing Agreement compliance unless excluded by Debt Securities Regulations 2008

SEBI has introduced Simplified Debt Listing Agreement that prescribed norms for issue of public or privately placed debt securities and listing of such securities on the exchange and has also issued Clarification on applicability of SEBI Regulations/ Circulars on Initial and Continuous Disclosures for Convertible and Non-Convertible Debt.

Since Part-A of the Listing Agreement for debt is applicable for debt issuers with already listed equity, it is clarified that the covenants in the Equity Listing Agreement that require submission of a draft offer document to SEBI for observations or obtaining of an acknowledgement card are not applicable in case of an issue of debt securities which is made in terms of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

Now, SEBI vide SEBI/IMD/DOF-1/BOND/Cir-5/2009 dated 26th November, 2009 has amended the following in the Debt Listing Agreement:

(a). 100% Asset Cover: To align the Listing Agreement with the provisions of the Companies Act, 1956, the amended Listing Agreement requires issuers to maintain 100% asset cover sufficient to discharge the principal amount at all times for the debt securities issued. Further, to provide more information to investors, the periodic disclosures to the stock exchange shall now require disclosure of the extent and nature of security created and maintained.

(b). Submission of certificate on maintenance of security: As against half-yearly certifications on security cover in respect of listed secured debt securities, the amended Listing Agreement provides for submission of such certificates regarding maintenance of 100% asset cover, and the time limit of submission in respect of the last half year has been aligned with the option provided for submission of annual audited results at a later date. In addition to Banks and NBFCs being exempt from submitting such certificates, issuers of Government guaranteed bonds shall also be exempt.

(c). Statement on Use of Issue Proceeds: In order to enhance the quality of disclosures made to investors, issuers shall be required to furnish a statement of deviations in use of issue proceeds, if any, to the stock exchange on a half yearly basis. Also, the same is required to be published in the newspapers simultaneously with the half-yearly financial results.

(d). Deposit of 1% of issue proceeds: So as to ensure that the interest of investors investing in public issues of debt securities is protected, the issuer shall be required to deposit an amount calculated at 1% of the amount of debt
securities offered for subscription to the public. It is refundable or forfeitable in the manner stated in the Rules, Bye-laws and Regulations of the Exchange.

(e). Submission/ publication of Financial Statements: The time-lines for disclosure of financial statements have been aligned with the proposed changes to the Equity Listing Agreement. Accordingly, issuers would now have to publish/furnish to the Exchange, either audited half yearly financial statements or unaudited half yearly financial statements subject to a limited review within 45 days from the end of the half year. In case of the last half year, issuers may opt to submit their annual audited results in lieu of the unaudited financial results for the period, within 60 days from the end of the financial year.

Click here for detailed amendments in Part A & Part B of Debt Listing Agreement

Thursday, November 19, 2009

Records to be maintained from transaction, Non profit organisation included, Suspicious transaction defined in amendment of Money Laundering Rules 2009

Notification No 13/2009/F.No. 6/8/2009- ES & G.S.R 816(E) dated 12th November 2009

Prevention of Money-laundering Act (PMLA), 2002 read with Rules is amended by Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries)  Amendment Rules, 2009

Rule 2(1)(ca) “non profit organisation” means any entity or organisation that is registered as a trust or a society under the Societies Registration Act, 1860 (21 of 1860) or any  similar State legislation or a company registered under section 25 of the Companies Act, 1956 (1 of 1956);

Rule 3(BA) all  transactions involving receipts by non-profit organisations of  value  more than  Rs. 10 lakh, or its equivalent in foreign currency; Kindly note, Rule 3 deals with Maintenance of records of transactions (nature and value) by banking company or financial institution or intermediary. [thus, covering Charitable trusts, whether temples, churches or mosques, non-government organisations (NGOs), educational institutions or societies and other Non-profit organisations, even Section 25 Company – see definition above]

Rule 6  Retention of records of transactions– The records referred to in rule 3 shall be maintained for a period of ten years from the date of [the word CESSATION OF is removed] transactions between the client and the banking company, financial institution or intermediary, as the case may be.  [Hence, the 10 year period begins from the date of transaction itself].

Rule 2(fa)  “Regulator” means a person or an authority or a Government which is vested with the power to license, authorise, register, regulate or supervise the activity of banking companies, financial institutions or intermediaries, as the case may be;

Rule 2(g)  “Suspicious transaction" means a transaction referred to in clause (h) [which defines the term transaction], including an attempted transaction, whether or not made in cash, which to a person acting in good faith -

(a) gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the Schedule to the Act, regardless of the value involved; or

(b) appears to be made in circumstances of unusual or unjustified complexity; or

(c) appears to have no economic rationale or bonafide purpose; or

(d) gives  rise  to  a  reasonable  ground  of  suspicion  that  it may involve financing of the activities relating to terrorism;

Rule 8 after sub-rule (3),  the following proviso shall be inserted at the end, namely:-

“Provided that a banking company, financial institution or intermediary, as the case may be, and its employees shall keep the fact  of furnishing information in respect of transactions referred to in clause (D) of sub-rule (1) of rule 3 strictly confidential.  [Thus, the records of transactions are made STRICTLY CONFIDENTIAL!]

In rule 9,-
(a)   for sub-rules (1) and (2), the following sub-rules shall be substituted, namely:-

“(1) Every banking company, financial institution and intermediary, as the case may be, shall,

(a)  at the time of commencement of an account-based relationship, identify its clients, verify their identity and obtain information on the purpose and intended nature of the business relationship,  and

(b) in all other cases, verify identity while carrying out:

(i) transaction of an amount equal to or exceeding rupees fifty thousand, whether conducted as a   single transaction or several transactions that appear to be connected, or

(ii)  any international  money transfer operations.

(1A) Every banking company, financial institution and intermediary, as the case may be, shall identify the beneficial owner and take all reasonable steps to verify his identity.

(1B) Every banking company, financial institution and intermediary, as the case may be, shall exercise ongoing due diligence with respect to the business relationship with every client and closely examine the transactions in order to ensure that they are consistent with their knowledge of the customer, his business  and risk profile.

(1C) No banking company, financial institution or intermediary, as the case may be, shall  keep any anonymous account or account in fictitious names.

(2) Where the client is an individual, he shall for the purpose of sub-rule (1), submit to the banking company, financial institution and intermediary, as the case may be, one certified copy of an ‘officially valid document’ containing details of his identity and address, one recent photograph and such other documents including in respect of the nature of business and financial status of the client as may be required by the banking company or the financial institution or the intermediary, as the case may be.

Provided that photograph need not be submitted by a client falling under clause (b) of sub-rule (1).”;

(b)   after sub-rule (6),  the following sub-rule shall be inserted, namely:-

“(6 A) Where the client is a  juridical person, the banking company, financial institution and intermediary, as the case may be, shall verify that any person purporting to act on behalf of  such client is so authorised and verify the identity of that person.”;

(c) for sub-rule (7), the following sub-rule shall be substituted, namely:-

“ (7) (i)The regulator shall issue guidelines incorporating the requirements of sub- rules (1) to (6A) above and may prescribe enhanced measures to verify the client’s identity taking into consideration type of client, business relationship or nature and value of transactions.

(ii) Every banking company, financial institution and intermediary as the case may be, shall formulate and implement a Client Identification Programme to determine the true identity of its clients, incorporating requirements of sub-rules (1) to (6A) and guidelines issued under clause (i) above.

Prevention of Money Laundering Act (PMLA), 2002 can be downloaded here.   Click here for SEBI Master circular on Money Laundering.

Accordingly, all authorized persons are advised to furnish Suspicious Transaction Report (STR) to FIU-IND in respect of their money changing activities within 7 days of arriving at a conclusion that a transaction, including attempted transaction, whether or not made in cash, or a series of transaction integrally connected are of suspicious nature. The formats of STR, both manual and electronic, have been made available by FIU-IND in their website [A.P. (DIR Series) Circular No.15 & A.P. (FL/RL Series) Circular No.02 dated November 19, 2009]

Tuesday, November 17, 2009

More disclosures in ADR/GDR & double 5% creeping acquisition benefit is the amended Takeover Code – Understand here…

SEBI (Substantial Acquisition of Shares & Takeovers - SAST) Regulations, 1997 [Takeover Code] as amended by SEBI (SAST)
(Third Amendment) Regulations, 2009

vide F.No.LAD-NRO/GN/2009-10/20/182131 dated 6/11/2009

In regulation 3, for sub-regulation (2), the following sub-regulation shall be substituted, namely: -
“(2) Nothing contained in regulation 10, regulation 11 and regulation 12 of these regulations shall apply to the acquisition of Global Depository Receipts or American Depository Receipts unless the holders thereof, -
(a) become entitled to exercise voting rights, in any manner whatsoever, on the underlying shares; or
(b) exchange such Depository Receipts with the underlying shares carrying voting rights.”

(ie) Erstwhile there was exemption from Chapter III as such but now it is Regulation 10, 11 & 12, further one more exception from the availability of exemption under regulation 3(2) has been included which provides that the no exemption from the applicability of regulation 10, 11 and 12 of SEBI Takeover Regulations would be available on the acquisition of ADRs or GDRs where the holder is entitled to exercise voting rights on the underlying shares.

In regulation 7, in sub-regulation (1A), after the word and figure “regulation 11” and before the mark and words “, shall disclose purchase”, the words and figure “or under second proviso to sub-regulation (2) of regulation 11” shall be inserted;

(ie) Acquirer who has acquired the shares in terms of the newly inserted proviso to regulation 11(2) is also required to give the disclosure under regulation 7(1A) of SEBI Takeover Code.

In regulation 11,-
in sub-regulation (1), after the words and figure “of the voting rights,”
and before the words “in any financial year”, the words and mark “with post acquisition shareholding or voting rights not exceeding fifty five per cent.,” shall be inserted;
(ie) the acquirer is allowed to increase his shareholding by creeping acquisition to the level of 55% and not beyond it.

In regulation 11, -

(a) in sub regulation (2), (A) after the words “either by himself or through” and before the words “persons acting in concert”, the words “or with” shall be inserted;
(b) in second proviso, after the words, “such acquirer may,” and before the words “without making a public announcement”, the words “notwithstanding the acquisition made under regulation 10 or sub-regulation (1) of regulation 11,” shall be inserted;

(ie) Acquirer can enjoy 5% creeping acquisition under Regulation 10 & 11(1) [when he is between 15% & 55%] and again the new 5% when he is between 55% & 75% in the same financial year.

In regulation 14,-
(a) in sub-regulation (2), the mark “.” occurring at the end shall be
substituted with the mark “:”;
(b) after sub-regulation (2), the following proviso shall be inserted,
“Provided that in case of American Depository Receipts or Global Depository Receipts entitling the holder thereof to exercise voting rights in excess of percentage specified in regulation 10 or regulation 11, on the shares underlying such depository receipts, public announcement shall be made within four working days of acquisition of such depository receipts.”

(ie) Entitlement to exercise the voting rights on the underlying shares of ADR/GDR in excess of percentage specified in regulation 10 or regulation 11 shall also be disclosed within 4 working days in addition to erstwhile conversion of ADR/GDR only.

Thursday, November 12, 2009

SEBI clarification on Insider Trading Amendment in FAQ form

Clarifications on SEBI (Prohibition of Insider Trading) Regulations, 1992 issued on 24th July 2009.  SEBI has amended certain provisions of SEBI (Prohibition of Insider Trading) Regulations, 1992 vide notification dated November 19, 2008 for the purpose of better disclosures and prevention of insider trading. Subsequently we received a few queries from the companies seeking clarification mainly on the interpretation of amendments. The queries received and the clarifications given by us on the same are presented below for information of all the listed companies.

To read the same, click Clarifications on SEBI (Prohibition of Insider Trading) Regulations, 1992

Tuesday, October 27, 2009

Priority lending to Training centres & consultancy services registered as Micro or Small enterprise – RBI instructs banks

Priority Sector Lending – Categorisation of activities under service under the Micro Small & Medium Enterprises Development (MSMED) Act, 2006

(i) Agriculture (Direct and Indirect finance)
(ii) Small Enterprises (Direct and Indirect Finance)
(iii) Retail Trade
(iv) Micro Credit
(v) Education loans
(vi) Housing loans

Understand about MSMED from

It has been decided to include loans granted by banks in respect of following activities under Micro and Small (Service) Enterprises within the priority sector, provided such enterprises satisfy the definition of Micro and Small (Service) Enterprises in respect of investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006) (i.e. not exceeding Rs. 10 lakh and Rs. 2 crore respectively).

  1. Consultancy Services including Management Services;
  2. Composite Broker Services in Risk and Insurance Management;
  3. Third Party Administration (TPA) Services for Medical Insurance Claims of Policy Holders;
  4. Seed Grading Services;
  5. Training-cum-Incubator Centre;
  6. Educational Institutions;
  7. Training Institutes;
  8. Retail Trade;
  9. Practice of Law, i.e. legal services;
  10. Trading in medical instruments (brand new);
  11. Placement and Management Consultancy Services; and
  12. Advertising agency and Training centres

Accordingly, there will be no separate category for "Retail Trade" under priority sector. Loans granted by banks for Retail Trade [i.e. advances granted to retail traders dealing in essential commodities (fair price shops), consumer co-operative stores; and advances granted to private retail traders with credit limits not exceeding Rs. 20 lakh) would henceforth be part of the Small (Service) Enterprises.

The commercial banks may report such loans under the head "Total credit to Small Enterprises" in the half-yearly (Ad-hoc) [under 2 (a) and 2 (ii)] and yearly (final) [under 14, 15, 19, 20 and 21] return on priority sector advances.

For All Primary (Urban) Co-operative Banks (read this circular UBD.CO.BPD(PCB) Cir.No.50/09.09.001/2009-10 dated March  25, 2010)

Source: RBI/2009-10/164 RPCD.CO.Plan.BC. 24 /04.09.01/2009-10 dated 18th September 2009

FEM (Deposit) (Amendment) Regulations, 2009 permits transfer of funds from rupee account of diplomatic mission in India which are collected as Visa fees

Foreign Exchange management (Deposit) (Amendment) Regulations, 2009

In exercise of the powers conferred by clause (f) of sub section (3) of section 6 and sub section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India makes the following amendments in the Foreign Exchange Management (Deposit) Regulations, 2000 (Notification No.FEMA.5/2000-RB dated May 3, 2000) namely : -
Amendment of the Regulations: -
In the Foreign Exchange Management (Deposit) Regulations, 2000 (Notification No.FEMA.5/2000-RB dated May 3, 2000), Regulation 4, in sub-regulation (3), for clause (a), the following shall be substituted, namely:-
“(a) credits to the account shall be only by way of:-
(i) proceeds of inward remittances received from outside India through normal banking channels; and
(ii) transfer of funds, from the rupee account of the diplomatic mission in India, which are collected in India as visa fees and credited to such account.

Source: Notification No.FEMA 193/2009-RB dated 2nd June, 2009

The Prevention of Money Laundering (Amendment) Act, 2009 [PMLA] has come into force with effect from 1st June 2009 & Master Circular – RBI/SEBI & Multi Level Marketing (MLM) firms

Download RBI Master Circular on Money Laundering / Know Your Customer (KYC).  This is in continuation of the same.

Preservation  Period of Records

The Prevention of Money Laundering (Amendment) Act, 2009 (No. 21 of 2009) has come into force with effect from June 01, 2009 as notified by the Government. In terms of Sub-Section 2(a) of Section 12 of The Prevention of Money Laundering (Amendment) Act, 2009 (PMLA, 2009), the records referred to in clause (a) of Sub-Section (1) of Section 12 shall be maintained for a period of ten years from the date of transaction between the clients and the banking company and in terms of Sub-Section 2(b) of Section 12 of the Act ibid, the records referred to in clause (c) of Sub-Section (1) of Section 12 shall be maintained for a period of ten years from the date of cessation of transaction between the clients and the banking company.

Accordingly, in modification of paragraph 2.16(iii) (a) of the above said master circular dated July 1, 2009, banks are advised to maintain for at least ten years from the date of transaction between the bank and the client, all necessary records of transactions referred to at Rule 3 of the Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005 (PMLA Rules), both domestic or international, which will permit reconstruction of individual transactions (including the amounts and types of currency involved, if any) so as to provide, if necessary, evidence for prosecution of persons involved in criminal activity.

However, records pertaining to the identification of the customer and his address (e.g. copies of documents like passports, identity cards, driving licenses, PAN card, utility bills etc.) obtained while opening the account and during the course of business relationship, as indicated in paragraph 2.16(iii)(b) of the above said master circular dated July 1, 2009, would continue to be preserved for at least ten years after the business relationship is ended as required under Rule 10 of the Rules ibid.

Accounts of Politically Exposed Persons (PEPs)

Detailed guidelines on Customer Due Diligence (CDD) measures to be made applicable to Politically Exposed Person (PEP) and their family members or close relatives are contained in paragraph 2.5(iv) of the master circular.  It is further advised  that in the event of an existing customer or the beneficial owner of an existing account,subsequently becoming a PEP, banks should obtain senior management approval to continue the business relationship and subject the account to the CDD measures as applicable to the customers of PEP category including enhanced monitoring on an ongoing basis.

Principal Officer

Banks have been advised in Para 2.15 of the master circular referred to above that banks should appoint a senior management officer to be designated as Principal Officer and the role and responsibilities of the Principal Officer have been detailed therein. With a view to enable the Principal Officer to discharge his responsibilities,  it is advised that that the Principal Officer and other appropriate staff should have timely access to customer identification data and other CDD information, transaction records and other relevant information. Further, banks should ensure that the Principal Officer is able to act independently and report directly to the senior management  or  to the Board of Directors.

Source: RBI/2009-10/152 DBOD. AML.BC. No.43 /14.01.001/2009-10 dated 11/09/2009

Further, in view of opening and conduct of the accounts of Multi Level Marketing (MLM) firms, we (RBI) advise that banks should be careful in opening accounts of the marketing/trading agencies etc. Especially, strict compliance with KYC and AML guidelines contained in circulars UBD.CO.BPD (PCB) No. 1/12.05.001/2008-09 dated July 02, 2008 and UBD.PCB. Cir. 30/09.161.00/2004-05 dated December 15, 2004 issued by RBI should be ensured in the matter.

In cases where accounts have already been opened in the names of the marketing agencies, retail traders, investment firms, the banks may undertake quick reviews. Wherever large number of cheque books has been issued to such firms, the relative decision may be reviewed in the light of the following:

  • Whether the cheque books have been issued to customers on the basis of their express request and after following the internal processes laid down in the matter.
  • Whether the number of cheque books is consistent with/matching the profile of the customers as also their nature of business operations.

Even where the volume of transactions/profile of the customers apparently justify the number of cheque books issued, special ongoing monitoring of the operations in the accounts of such types of firms should be made especially if large volumes of small cash deposits are being made in those accounts and withdrawals are being made there from, through cheques written for small amounts, either across the counters or through clearing. In respect of such account holders banks may, in specific cases, call for the data from the account holders on the number and aggregate amount of post dated cheques issued. The data/information so collected should be analysed in select cases to rule out the possibility of the firms being engaged in deposit taking activities. Certain indicative parameters for selecting accounts for further scrutiny and action are the bunching of dates of the post dated cheques, the uniformity in the amounts of cheques etc. These data should be analysed together with data on cash deposits of small amounts on previous distant dates resembling the deposit contracting/mobilizations dates in terms of similar bunching and uniformity of amounts.

Please acknowledge receipt. Also, unusual operations noticed during the above review may be immediately reported to us and other appropriate authorities, such as, Financial Intelligence Unit (FIU-IND), Department of Revenue, Ministry of Finance, Government of India, Hotel Samrat (6th Floor), Chanakyapuri, New Delhi - 110 021.

Source: RBI/2009-10/158 UBD. CO. BPD. PCB.Cir. No.9/12.05.001 / 2009-10 dated 16/09/2009

Friday, August 28, 2009

Understand New FTP 2009 – introduction of towns for export excellence,diamond bourses,EDI & more technology benefits apart from increase in duty scrips and extension of time limits

The New FTP Policy is released and shall come into force w.e.f. 27th August, 2009.  Kindly note, FTP is a Export Import (EXIM) policy published by Director General of Foreign Trade (DGFT)  under Ministry of Commerce under the powers of Foreign Trade (Development & Regulation) Act, 1992.  FTP is published for every 5 years.

Source : Foreign Trade Policy 2009-2014 & Foreign Trade Procedures 2009-2014 [Handbook of Procedures (Volume 1) & Appendices]

Erstwhile foreign trade policy (FTP) 2004-2009 had set two objectives, namely,

(i) to double our percentage share of global merchandize trade within 5 years and (ii) use trade expansion as an effective instrument of economic growth and employment generation.

Understand the basics of Policy from WTO - FTP - Understand this way ....


Understand the basic amendments,

  • To make the environment conducive for foreign trade and it was decided to continue with the DEPB Scheme upto December 2010 and income tax benefits.
  • Further under Section 10A for IT industry (STPI) and under Section 10B of Income Tax Act for 100% export oriented units for one additional year till 31st March 2011.
  • To encourage value addition in our manufactured exports and towards this end, have stipulated a minimum 15% value addition on imported inputs under advance authorization scheme.
  • The Government seeks to promote Brand India through 6 or more ‘Made in India’ shows to be organized across the world every year.
  • Technological upgradation of exports is sought to be achieved by promoting imports of capital goods for certain sectors under EPCG at 0% duty.  Additional Duty Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past exports.  The duty credit scrips can be used for procurement of capital goods with Actual User condition.  This Scheme will be available for engineering & electronic products, basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts, chemicals & allied products and leather & leather products (subject to exclusions of current beneficiaries under Technological Upgradation Fund Schemes (TUFS), administered by Ministry of Textiles and beneficiaries of Status Holder Incentive Scheme in that particular year). The scheme shall be in operation till 31.3.2011.
  • For upgradation of export sector infrastructure, ‘Towns of Export Excellence’ and units located therein would be granted additional focused support and incentives.  For instance, Jaipur, Srinagar and Anantnag have been recognised as ‘Towns of Export Excellence’ for handicrafts; Kanpur, Dewas and Ambur have been recognised as ‘Towns of Export Excellence’ for leather products; and Malihabad
    for horticultural products.
  • To enable support to Indian industry and exporters, especially the Micro Small & Medium Enterprises, in availing their rights through trade remedy instruments under the WTO framework, we propose to set up a Directorate of Trade Remedy Measures.
  • In order to reduce the transaction cost and institutional bottlenecks, the e-trade project would be implemented in a time bound manner to bring all stake holders on a common platform.  Additional ports/locations would be enabled on the Electronic Data Interchange (EDI) over the next few years.
  • To further EDI initiatives, Export Promotion Councils/Commodity Boards have been advised to issue RCMC through a web based online system. It is expected that issuance of RCMC would become EDI enabled before the end of 2009. 
  • An Inter-Ministerial Committee has been established to serve as a single window mechanism for resolution of trade related grievances.
  • In an endeavour to make India a diamond international trading hub, it is planned to establish “Diamond Bourse(s)”.

Understand more highlights from Highlights of Foreign Trade Policy

Monday, August 24, 2009

What next after CS exam results August 2009, register for Executive or Professional program & finish NIIT, TOP, ADP, SMTP from ICSI

The results of the CS Foundation Course, Intermediate and Final (Old Syllabus) and Foundation Programme, Intermediate/Executive Programme, and Professional Programme (New Syllabus) examinations of the Company Secretaries held in June, 2009 are scheduled to be declared at 12.00 Noon on 25th August, 2009 at and also try


Candidates registered upto and including the month of August in a year are eligible for appearing in both the groups of the Executive Programme or all 4 modules of Professional Programme examination held in June of next year. So, its mandatory for you to submit prescribed forms before 31st August 2009 to appear for all modules in December 2009.  There is one another new requirement in lieu of TOP, SMTP, etc…which is called Student Induction Programme (SIP), Executive Development Programme (EDP)  and Professional Development Programme (PDP) from 1st September 2009 0nwards, so make your enrolment fast.

Before visiting the nearest ICSI office, make sure you are ready with following things:

For Foundation passed:

  1. Get to know your subjects and classes schedules at
  2. Register for Computer Training with NIIT or produce your Certificates to write Exemption exam (Detailed FAQs) on or before February 2010
  3. Enjoy reading CS Executive Programme books from

For Executive passed:

  1. Click here to download & fill CS Professional Program Application - and arrange for fees as per Apply for Training Orientation Program (TOP) and find details from nearest ICSI - (its a mandatory pre-requisite to commence CS Training). TOP is a 5 full day program offered at ICSI and your training will commence only on completion of this program
  2. Then, start sending emails & applications of RESUME for CS Training to
    1. List of Company Secretaries in Practice Registered for Imparting Training
    2. Registered Companies for Training
  3. For 15-month CS Training related information, you can click
  4. Start looking out for Academic Development Programs (ADP) as its mandatory to attend for 25 hours or you have the option to register for National Convention of ICSI.
  5. Get to know your subjects and classes schedules at
  6. Enjoy reading CS Professional books (coming sooooon), keep watchin…

For Professional passed:

  1. Pending Training you are eligible for Licentiate Membership of ICSI - and you will get Chartered Secretary (Members magazine) free of cost.
  2. Complete your CS Training or Claim exemption from it following
  3. Complete RoC Training or Stock Exchange training, if applicable. Send e-mail to to get the sponsorship letter.
  4. Complete ADP's, if applicable & pending
  5. Then, apply for the esteemed membership of ICSI following,

Hope, I have not missed out anything. Of course, you can keep track of all updates, happenings and all about Company Secretaries by following and Get See Yes -> Yes, ACS delivered by email

New 6.42 disclosures for rights issue & ASBA also made applicable & utilisation of funds only after finalisation of allotment, SEBI DIP amended

SEBI/CFD/DIL/DIP/38/2009/08/20 dated August 20, 2009

Download Amended SEBI (DIP) Guidelines, 2000 till date

1. Applications Supported by Blocked Amount (ASBA) in rights issues:

It has now been decided to make ASBA applicable to all rights issues. ASBA will co-exist with the current process, wherein cheque/demand draft is used as a mode of payment. Since the web enabled interface of stock exchanges is now operational [have a look at NSE’s Workstation] for the purpose of acceptance of the rights issue applications, self certified syndicate banks shall upload the application data in to the aforesaid interface of stock exchanges.  Understand about ASBA from [SEBI-ASBA] Lets Learn the Concept.


  1. All applicants who desire to apply through ASBA should hold shares of the issuer company in a depository account.
  2. The applicants shall indicate either in (i) in Part A of the composite application form of rights issue or (ii) in the plain paper application, as to whether they desire to avail of the ASBA option.
  3. All other provisions shall apply mutatis mutandis (means, as like a Public Issue with such modification of the words as Rights issue).

2. Other Amendments numbered as A, B, C, D & E for reference

As you are aware that under clause 8.19 of the SEBI (DIP) Guidelines provides that in a rights issue, the issuer may utilise the issue proceeds collected after satisfying the designated stock exchange that minimum 90% subscription is received and also SEBI has reduced the time period taken for finalization of basis of allotment in the rights issues to 15 days from the date of closure of the issue.  In a public issue, in terms of section 73 of the Companies Act, 1956, the issuer company can access the issue proceeds only after allotment and listing is completed.  All the following Amendments shall be applicable for all rights issues where Draft letters of offer are filed or where Final Letter of Offer is yet to be filed with SEBI on or after the date of this circular.

A. In the clause 5.7.2: In the case of rights issues, lead merchant banker shall ensure that the abridged letters of offer ALONG WITH COMPOSITE APPLICATION are dispatched to all shareholders at least 3 days before the date of opening of the issue.

B. All the new clauses are using the word COMPOSITE application instead of STANDARD application as earlier (in case of rights issues).

C. In CHAPTER VI of the DIP Guidelines dealing with DISCLOSURES regarding rights issue, many amendments were made as below:


There are 3 types of disclosures,

  • 6.42 disclosures on satisfaction of certain conditions
  • Partly Section I and Partly 6.42 disclosures
  • Section I disclosures as like the existing provision

I. A listed issuer company making a rights issue shall make disclosures, as
specified in clause 6.42
, in the letter of offer, if it satisfies the 6.39 conditions as mentioned below:
(a) the issuer company has been filing periodic reports, statements and
information in compliance with the listing agreement for the last 3 years immediately preceding the date of filing of the letter of offer with the designated stock exchange or SEBI.
(b) the information referred to in sub-clause (a) above are available on the website of any recognised stock exchange with nationwide trading terminals or on a common e-filing platform specified by the SEBI.

(c) the issuer company has investor grievance-handling mechanism which includes meeting of the Shareholders’ or Investors’ Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the issuer company as regards share transfer and clearly laid systems and procedures for timely and satisfactory redressal of investor grievances.

As per 6.43, every such listed company shall also make a copy of offer document available to the public in the manner specified in sub-clause (ii) of clause 5.6.2 and shall also make such document available as a material document for inspection.


Clause 6.40: If the listed issuer company does not satisfy the ABOVE conditions, it shall make disclosures in the letter of offer as specified in Section I and as specified in sub-clauses (d), (e) and (f) of clause of Section III.


Clause 6.41: Irrespective of whether the conditions specified in clause 6.39 are satisfied or not, the following listed issuer companies shall make disclosures, as specified in Section I, in the letter of offer:
(a) A listed issuer company whose management has undergone change pursuant to acquisition of control in accordance with the provisions of SEBI Takeover Code.
(b) An issuer company whose securities have been listed consequent to relaxation granted by the Board under sub-rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957 for listing of its securities pursuant to a scheme sanctioned by a High Court under sections 391 to 394 of the Companies Act, 1956.

D. In chapter VI, Section IV shall be substituted with the following section as under:-
SECTION IV - CONTENTS OF THE ABRIDGED LETTER OF OFFER: In that clauses 6.44, 6.45 and 6.46 are SUBSTITUTED with new clauses.

For clause 8.19.1, the following clause shall be substituted, namely:-
“The issuer company may utilise the funds collected in the rights issue only after the basis of allotment is finalized.”  Just remember, it is no more after minimum 90% subscription is received.

Thursday, August 20, 2009

Same exit loads for all Mutual Fund (MF) holders irrespective of Subscription amounts, SEBI says

SEBI / IMD / CIR No. 6 /172445/ 2009 dated August 7, 2009 & SEBI / IMD / CIR No. 7 /173650 / 2009 dated August 17, 2009

It is observed that the mutual funds are making distinction between the unit
holders by charging differential exit loads based on the amount of subscription. In order to have parity among all classes of unit holders, it has now been decided that no distinction among unit holders should be made based on the amount of subscription while charging exit loads.

While complying with the aforesaid circular, it shall be ensured that:

  1. The principle laid down in the SEBI circular No. SEBI/IMD/CIR No. 5/126096/08 dated May 23, 2008 (clause 16 of the standard observations) that “any imposition or enhancement in the load shall be applicable on prospective investments only” shall be followed.
  2. The parity among all classes of unit holders in terms of charging exit load shall be made applicable at the portfolio level.

Further, you are aware that SEBI vide circular No. SEBI/IMD/CIR No. 5/126096/08 dated May 23, 2008 has simplified the formats for Offer Document and Key Information Memorandum of Mutual Funds Scheme [SEBI-Simplification of Offer Document and Key Information Memorandum of Mutual Funds Scheme]. The simplified Scheme Information Document format provides that “Wherever quantitative discounts are involved the following shall be disclosed – The Mutual Fund may charge the load within the stipulated limit of 7% and without any discrimination to any specific group of unit holders. However, any change at a later stage shall not affect the existing unit holders adversely”.

Wednesday, August 12, 2009

Saturday Sunday Crash Classes for CS, CA & CWA on Law, FM, Tax & Costing at Learnlabz, enjoy passing

LEARN LABZ – Xperiment, Xcel!

(SPECALISING in Law, FM, Tax, Costing for

 CS, CA & CWA)


Crash Batches on Saturdays & Sundays of September & October 2009


1. “Company Secretary”Crash Batch from 15th September 2009 [Click here for Timetable - Executive & Professional]

2. “Chartered Accountant”- Crash Batch from 10th September 2009 [Click here for Timetable]

3. “Cost & Works Accountant” - Crash Batch from 5th September 2009 [Click here for Timetable]



ü       Faculties include CA Giridharan, CWA CS Baskaran & CS A.N.S. Vijay

ü       Subjects covered include LAW, FM, TAXES, COSTING

ü       Fees Rs.1000/- per subject

ü       Registrations closes on 5th September 2009, Limited Seats


“Company Secretary” – Daily Batch for All subjects from 15th August 2009

For Batch details &


For Registration/Enquiry Call:  93829 35598 

Registration venue - Learn Labz @

No.128 Veera Perumal Koil Street
, Mylapore, Chennai.

Classes conducted at – MSN Business Centre, Nungambakkam (Near Ayappan Temple)     


“We make Learning an Exciting experience”

SEBI IPEF Aid for Legal Proceedings are issued as guidelines 2009 to enable reimbursement of 75% of expenses incurred by Investor Associations

As you are aware that SEBI has notified Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009 (SEBI IEPF notified to protect investors with 14 regulations, 2009, which also amends forfeiture)

Regulation 5(1)(d) of SEBI IPEF Regulations, 2009 states that “aiding investors’ associations recognized by SEBI to undertake legal proceedings in the interest of investors in securities that are listed or proposed to be listed”.  To enable the aid, SEBI has now provided Securities and Exchange Board of India (Aid for Legal Proceedings) Guidelines, 2009.

1. The aid is for the ‘Legal proceedings’ (as defined in Reg 2(1)(g) of SEBI IPEF Regulation which) MEANS any proceedings before a court or tribunal where 1000 (one thousand) or more investors are affected or likely to be affected by:- (i), (ii), (iii), (iv), (v) & (vi) such other market misconduct which in the opinion of the Board may be deemed appropriate;
BUT DOES NOT INCLUDE any proceeding where the Board is a party or where SEBI has initiated any enforcement action.

2. The legal aid covers the ‘Expenses’ as defined u/3(1)(a) of this Legal Aid Guidelines as ‘expenses’ means the expenses incurred with respect to any or all of the following in connection with a legal proceedings:-
i. court fees, process fees and other fees/charges payable in the courts as per law;
ii. the bills of solicitors, advocates and senior advocates for professional services rendered by them ;
iii. the clerkage and other miscellaneous expenses charged by the counsels, senior counsels and solicitors, as applicable.

3. Any Investors’ Association may make an application with details as given under Guideline 4(3) to SEBI seeking aid for undertaking legal proceedings.  Kindly note, the application and SEBI approval to be sought at every stage of the proceeding before every Court.

4. In case legal proceedings relates to mis-statement, misrepresentation or
omission in connection with the issue, sale or purchase of securities, the
application shall establish that: the investors relied upon such mis-statement, misrepresentation or omission and such statements caused monetary loss to the investors.

5. The aid for the legal proceedings shall be granted at the discretion of the
SEBI if it is prima facie satisfied that the aid is in the best interest of the investors.  SEBI shall issue a letter conveying grant of aid for a particular legal proceedings.

6. Payments: The aid for a particular legal proceedings shall be

  • UPTO Rs. 20 lakh if it is before the Supreme Court of India and
  • UPTO Rs. 10 lakh before any other forum.

7. The bills submitted shall be certified by the Auditor of the Investors’
Association and UPTO 75% of the expenses actually incurred shall be
reimbursed WITHIN 15 days of the receipt of claims.

8. The Investor Association shall submit a periodical report of the legal proceedings to SEBI and on conclusion of proceedings, a detailed report statement to be submitted with a self-certified statement on the utilization of aid by it.

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