Download SME Listing Agreement & understand deviations from Equity; how to set up SME Exchange with networth of 100 crores & requirements under SCRA

Sub: Conditions of listing for issuers seeking listing on SME Exchange - Model SME Equity Listing Agreement In recognition of the need for making finance available to small and medium enterprises, SEBI has decided to encourage promotion of dedicated exchanges and/or dedicated platforms of the exchanges for listing and trading of securities issued by Small and Medium Enterprises (“SME”). Consequently, SEBI amended SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“SEBI (ICDR) Regulations”) by inserting a Chapter XA on “Issue of specified securities by small and medium enterprises”, through notification dated April 13, 2010. In continuation of the same and to facilitate listing of specified securities in the SME exchange, “Model Equity Listing Agreement” to be executed between the issuer and the Stock Exchange, to list/migrate the specified securities on SME Exchange, is specified through this circular.

SME listing agreement is same as Equity listing agreement.  However, certain relaxations are provided to the issuers whose securities are listed on SME exchange in comparison to the listing requirements in Main Board (= other than SME Exchanges), which inter-alia include the following:

a. Companies listed on the SME exchange may send to their shareholders, a statement containing the salient features of all the documents [in abridged form], as prescribed in proviso to section 219(b)(iv) of the Companies Act, 1956, instead of sending a full Annual Report;
b. Periodical financial results may be submitted on “half yearly basis”, instead of “quarterly basis” under Clause 41 and
c. Every issuer listed under SME Exchange shall have their own website.

d. SMEs need not publish their financial results in newspapers, as required in the Main Board (= other than SME Exchanges)  and can make it available on their website.

Download SME Listing Agreement

Sub: Setting up of a Stock exchange/ a trading platform by a recognized stock exchange

A. A company desirous of being recognized as a SME exchange may apply to Market Regulation Department, SEBI, in accordance with the provisions of the Securities Contracts (Regulation) Act,1956 ( SCRA) read with the provisions of the Securities Contracts (Regulation) Rules, 1957 (the SCRR), subject to the applicant fulfilling the following conditions:
(i) It is a corporatised and demutualised entity and is compliant with requirements of maintaining public shareholding and shareholding restrictions in accordance with Chapters II and III of the Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges) Regulations, 2006;
(ii) It has a balance sheet networth of atleast Rs. 100 crores;
(iii) It shall have nation wide trading terminals and an online screen-based trading system, a suitable Business Continuity Plan including a disaster recovery site;
(iv) It shall have an online surveillance capability which monitors positions, prices and volumes in real time so as to check market manipulation;
(v) It shall have adequate arbitration and investor grievances redressal mechanism operative from all the four regions of the country.
(vi) It shall have adequate inspection capability;
(vii) It shall have the same risk management system and surveillance system as are required for cash market segment of a recognised stock exchange;
(viii) Information about trades, quantities, and quotes shall be disseminated by the recognized stock exchange in real time to at least two information vending networks which are accessible to investors in the country;
(ix) The trading system of the stock exchange may be quote driven or a hybrid of quote driven and order driven. The settlement system in the stock exchange shall be the same as that of the cash market of a recognised stock exchange;
(x) The clearing function of the stock exchange shall be performed by a clearing corporation/ clearing house;
(xi) The minimum lot size for trading on the stock exchange shall be one lakh rupees.
B. The above eligibility criteria shall mutatis mutandis apply to recognised stock exchanges having nation wide trading terminals and which
desires to set up a trading platform for listing of the specified securities issued in terms of Chapter XA of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. Such recognised stock exchange shall file an application demonstrating its compliance with the conditions mentioned in subpara (i) to (xi) of para 6 above alongwith the proposed Rules, Regulations and Byelaws for the SME platform. Such a platform can be operationalised by the recognised stock exchange only after obtaining prior approval of SEBI.

Source:

1. Setting up of a Stock exchange/ a trading platform by a recognized
   stock exchange having nationwide trading terminals for SME vide CIR/MRD/DSA/17/2010 dated 18th May 2010.
2. Conditions of listing for issuers seeking listing on SME Exchange - Model SME Equity Listing Agreement vide CIR/CFD/DIL/6/2010 dated May 17, 2010.

Website link thru BSE/NSE to download ASBA forms online with UIN for making public issue applications - SEBI

SEBI is taking steps forward to make a public issue process completely online.

1. It has been decided to make ASBA bid-cum application forms available for download and printing, from websites of the Stock Exchanges which provide electronic interface for ASBA facility i.e. Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The ASBA forms so downloaded shall have a unique application number and can be used for making ASBA applications in public issues. A sample of the form is enclosed at Annexure A. 

Understand all about ASBA - in public issues, rights issues, by Mutual Funds, by QIB's - an alternate way of investing, SEBI

2. In order that the Stock Exchanges fill up essential details of an issue, the Merchant Banker to the issue shall ensure that the following details are provided to the Stock Exchanges at least 2 days before opening of the public issue:
a. Company Name
b. Type of issue
c. Issue opening date
d. Issue closing date
e. Price/ price band
f. Bid lot
g. Other relevant details
h. Soft copy of prospectus/abridged prospectus
3. The Stock Exchanges shall ensure the following :
a. The details furnished by the Merchant Banker to the issue are duly filled in the ASBA form for a specific public issue, before making the same available on websites.
b. The ASBA form for a specific public issue is made available on the websites of the Stock Exchanges at least one day before opening of the public issue.
c. A unique application number for an issue is generated for every ASBA form downloaded and printed from the websites.  Therefore application made using photocopy of the downloaded form shall not be accepted.
d. Investors have online access to soft copy of the abridged prospectus/prospectus of the public issue.
e. For revisions of bids, investors can take print of a bid revision form.
4. Merchant Bankers and SCSBs are directed to provide a hyperlink to BSE or NSE websites for this facility on their websites.  Links are expected in http://www.nseindia.com/content/ipo/ipo_asba_procedures.htm & http://www.bseindia.com/bookbuilding/asba.asp
5. All intermediaries are directed to comply with the instructions contained in this circular.
6. This circular shall be applicable to all public issues opening on or after July 19, 2010.

New Rule 19(2)(b) & 19A for initial & continuous listing requirement of 25% of capital with public as per SCRR amendment 2010 [for all companies]: 10% for 4000 crores to be increased@5% every year

The Securities Contracts (Regulation) Rules 1957 provide for the requirements which have to be satisfied by companies for the purpose of getting their securities listed on any stock exchange in India. A dispersed shareholding structure is essential for the sustenance of a continuous market for listed securities to provide liquidity to the investors and to discover fair prices. Further, the larger the number of shareholders, the less is the scope for price manipulation. Accordingly, the Finance Minister in his Budget speech for 2009-10, inter- alia, proposed to raise the threshold for non- promoter, public shareholding for all listed companies. To implement the Budget announcement the Securities Contracts(Regulation) (Amendment) Rules, 2010 has been notified vide Press Release F.No.5/35/2006-CM dated 4th June 2010 through

this Notification. [download now]

a) The minimum threshold level of public holding will be 25% for all listed companies.

b) Existing listed companies having less than 25% public holding have to reach the minimum 25% level by an annual addition of not less than 5% to public holding.

c) For new listing, if the post issue capital of the company calculated at offer price is more than Rs. 4000 crore, the company may be allowed to go public with 10% public shareholding and comply with the 25% public shareholding requirement by increasing its public shareholding by at least 5% per annum.

d) For companies whose draft offer document is pending with Securities and Exchange Board of India on or before these amendments are required to comply with 25% public shareholding requirement by increasing its public shareholding by at least 5% per annum, irrespective of the amount of post issue capital of the company calculated at offer price.

e) A company may increase its public shareholding by less than 5% in a year if such increase brings its public shareholding to the level of 25% in that year.

f) The requirement for continuous listing will be the same as the conditions for initial listing.

g) Every listed company shall maintain public shareholding of at least 25%. If the public shareholding in a listed company falls below 25% at any time, such company shall bring the public shareholding to 25% within a maximum period of 12 months from the date of such fall.

New definitions in Rule 2 of SCRR:

(d) “public” means persons other than – (i) the promoter and promoter group; (ii) subsidiaries and associates of the company. Explanation: For the purpose of this clause the words “promoter‟ and “promoter group‟ shall have the same meaning as assigned to them under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements-ICDR) Regulations, 2009.

(e) “public shareholding” means equity shares of the company held by public and shall exclude shares which are held by custodian against depository receipts issued overseas”.

New Rule 19(2)(b) of SCRR:

(i) At least 25% of each class or kind of equity shares or debentures convertible into equity shares issued by the company was offered and allotted to public in terms of an offer document; or
(ii) At least 10% of each class or kind of equity shares or debentures convertible into equity shares issued by the company was offered and allotted to public in terms of an offer document if the post issue capital of the company calculated at offer price is more than Rs. 4000 crores;

Provided that the requirement of post issue capital being more than Rs. 4000 crores shall not apply to a company whose draft offer document is pending with SEBI on or before the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, if it satisfies the conditions prescribed in clause (b) of sub-rule 2 of rule 19 of the Securities Contracts (Regulation) Rules, 1956 as existed prior to the date of such commencement (which is: offering atleast 10% if there are 20 lakh in number of securities, Rs.100 crores of offer size is given to public and follows bookbuilding by offering 60% to QIB)
Provided further that the company, referred in sub-clause (ii), shall bring the public shareholding to the level of at least 25% by increasing its public shareholding to the extent of at least 5% per annum beginning from the date of listing of the securities, in the manner specified by the Securities and Exchange Board of India .
Provided further that the company may increase its public shareholding by less than 5% in a year if such increase brings its public shareholding to the level of 25% in that year.

 

New Rule 19(4) of SCRR – fresh application in all cases now!!!

An application for listing shall be necessary in respect of the following: (a) all new issues of any class or kind of securities of a company to be offered to the public; (b) all further issues of any class or kind of securities of a company if such class or kind of securities of the company are already listed on a recognised stock exchange.

 

New Rule 19(6A) – taking away the power from Clause 40A of Listing Agreement of stock exchanges as there is no more Provisio!!!

All the requirements with respect to listing or continuous listing requirement prescribed by these rules, shall, so far as they may be, also apply to a body corporate constituted by an Act of Parliament or any State Legislature. [Old Provisio deleted]

Note: SEBI’s power to relax listing requirements under SCRR is withdrawn.  Also note, there is no more Clause 40A continuous listing requirement of 10% if the company has 2 crores of listed shares with a market capitalisation of Rs.1000 crore or more.

Clause 40A is now Rule 19A mandating 25% as CONTINUOUS LISTING REQUIREMENT for all Companies:

Every listed company shall maintain public shareholding of at least 25%

Provided that any listed company which has public shareholding below 25% on the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, shall bring the public shareholding to the level of at least 25% by increasing its public shareholding to the extent of at least 5% per annum beginning from the date of such commencement, in the manner specified by SEBI.

Provided further that the company may increase its public sharholding by less than 5% in a year if such increase brings its public shareholding to the level of 25% in that year.

(2) Where the public shareholding in a listed company falls below 25% at any time, such company shall bring the public shareholding to 25%within a maximum period of 12 months from the date of such fall in the manner specified by the Securities and Exchange Board of India.”

SEBI Credit Rating Guidelines/Regulations with provisions for unsolicited credit ratings & structured finance products provisions

SEBI Credit Rating Guidelines

Effective use of credit ratings by the users is crucially dependent upon quality and quantity of disclosures made by the Credit Rating Agencies (CRAs).

CRA should publish information about the historical default rates of CRA rating categories and whether the default rates of these categories have changed over time, so that the public can understand the historical performance of each category and if and how rating categories have changed, and be able to draw quality comparisons among ratings given by different CRAs.

The default rates shall be calculated in the following manner:

• One Year Default Rate is the weighted average of default rates of all possible 1 year static pools in the 5-year period.
• Cumulative Default Rate: The cumulative default rate (CDR) represents the likelihood of an entity that was rated at the beginning of any multi-year period defaulting at any time during the multi-year period.
• 3 year cumulative default rate shall be computed as:
  3 year CDR for rating category X = No. of issuers which defaulted over the 3 year period / No. of issuers outstanding at the beginning of the 3 year period.

In case of unsolicited credit ratings, i.e. the credit ratings not arising out of the agreement between a CRA and the issuer, credit rating symbol shall be accompanied by the word “UNSOLICITED” in the same font size.

Obligations in respect of Rating of Structured Finance Products
A CRA may undertake rating of structured finance products, namely, instruments / pay-outs resulting from securitization transactions (under SARFAESI Act, 2002 read with SEBI (POLSDI) Regulations, 2008). In such cases, apart from following all the applicable requirements in case of non-structured ratings, few other additional requirements shall also be complied with.  The rating symbols shall clearly indicate that the ratings are for structured finance products.  A CRA shall also disclose at least once in every six months, the performance of the rated pool, i.e., collection efficiency, delinquencies of the Structured Finance Products.

Source: SEBI CIR/MIRSD/CRA/6/2010 dated 3rd May 2010

What is Corpfiling for Listed Company & how investors can get information online now (excel based filing), SEBI/Stock exchange website

SEBI had, vide circular no SEBI/CFD/DIL/LA/4/2007/27/12 dated December 27, 2007 informed that Electronic Data Information Filing And Retrieval (EDIFAR) will be phased out gradually in view of new portal viz. Corporate Filing and Dissemination System (CFDS) put in place jointly by BSE and NSE at the URL www.corpfiling.co.in.  No more EDIFAR...File it thru corpfiling SEBI says

 

SEBI has since discontinued the EDIFAR system w.e.f from April 1, 2010. In view of this, Stock Exchanges are advised to carry out the consequential amendments in Equity Listing Agreement i.e. removal of words, “and also through the EDIFAR website” from Clause 32 and omission of Clause 51 from Equity Listing Agreement. The Stock Exchanges are also advised to inform about discontinuation of EDIFAR to all the listed companies.

 

Now on, all the Stock Exchange/SEBI related filing such as

• Company Results
• Corporate Announcements
• Company Factsheet
• Quarterly Compliance Report
• Share Holding Pattern
• SAST (Takeover Code)
• Insider Trading

can be done online through Microsoft Excel sheet as downloaded from the said website.  The portal aims at providing a single interface to the investors/shareholders/stakeholders to keep track of the latest filings of all the listed companies in India online irrespective of the Stock Exchange.

Download Pre-requisite softwares for corpfiling.

Source: SEBI CIR/CFD/DCR/3/2010 dated 16th April 2010

SEBI Timelines for 12 day listing of IPO/FPO/Public issue of securities w.e.f 3rd May 2010 - The Public offer schedule to commence trading

In consultation with market intermediaries, SEBI has issued a press release for Listing with Stock Exchanges to be made within 12 days of closure of public issue wef 1st May 2010.

In the new process, the syndicate members shall capture all data relevant for
purposes of finalizing basis of allotment while uploading bid data in the electronic bidding system of the stock exchanges. In order that the data so captured is accurate, syndicate members may be permitted an additional day to amend some of the data fields entered by them in the electronic bidding system.

It is to be noted that syndicate members shall be responsible for any error in the bid details uploaded by them. In case of apparent data entry error by either syndicate member or collecting bank in entering the application number in their respective schedules other things remaining unchanged, the application may be considered as valid and such exceptions may be recorded in minutes of the meeting submitted to stock exchange(s). In the event of mistake in capturing the application number by either the syndicate member or collecting bank leading to rejection of application, the registrar may identify based on the bid form, the entity responsible for the error. Valid records in electronic file will be those for which money is received.

This circular contains indicative timelines for the various activities in the issue process. The non-ASBA process in this regard is given in Annexure I of the circular. Since the ASBA process also needs to be revised pursuant to the
reduced timelines, the revised ASBA process is indicated in Annexure II of the circular.

Details of the mandatory data fields which are required to be captured into the electronic bidding system by the syndicate members including the fields which are modifiable/non-modifiable is given in Annexure III of the circular.

In order to facilitate quicker processing of applications for the purpose of allotment, instead of the name of the applicant, it is proposed to use PAN which is a unique identification number of the applicant. In this regard, the merchant bankers are directed to ensure that the following is clearly disclosed in the prospectus/abridged prospectus, application form and the pre-issue advertisements: “The applicants may note that in case the DP ID & Client ID and PAN mentioned in the application form and entered into the electronic bidding system of the stock exchanges by the syndicate members do not match with the DP ID & Client ID and PAN available in the depository database, the application is liable to be rejected.”

Stock Exchanges are directed to ensure that in case of revision of bids, there shall be appropriate provisions to capture the details of the payment instrument for difference of amount, if any.  It is given to understand that there is no uniformity in the documents required to be submitted to the stock exchanges along with the listing application which results in delay in the process. In this regard, stock exchanges are directed to clearly indicate the list of documents which they require for giving listing approval, at the time of grant of in-principle approval.

Stock Exchanges, Merchant Bankers, Registrar to an Issue, Bankers to an issue including those acting as Self Certified Syndicate Banks and depositories are directed to ensure that the instructions contained in this circular are complied with. This revised procedure shall be applicable to all public issues opening on or after May 3, 2010.

Download the IPO Timeline or Public Issue Schedule issued by SEBI from T+0 till T + 12 days, where “T” is the issue closing date and “T+12” is the date of commencement of trading vide SEBI CIR/CFD/DIL/3/2010 dated 22nd April 2010.

Market makers in SME exchange for Rs.10 lakh & max bid ask spread may be prescribed later, SEBI guidelines

Sub: Guidelines for market makers on Small and Medium Enterprise (SME) exchange/separate platform of existing exchange having nation wide terminal
SEBI has put in a framework for setting up of new exchange or separate platform of existing stock exchange having nationwide terminals for SME (hereinafter referred to as the ‘Exchange/ SME Exchange’). In order to operationalise the said framework, necessary changes have been made to applicable Regulations, circulars etc. As per the framework, market making has been made mandatory in respect of all scrips listed and traded on SME exchange. The following guidelines shall be applicable to the Market Makers on this exchange.
1. Applicability
These guidelines are applicable to all the registered Market makers for making market in all scrips listed and traded on SME exchange.
2. Registration of the Market Maker
Any member of the Exchange would be eligible to act as Market Maker provided the criteria laid down by the exchange are met. The member brokers desirous of acting as Market Maker in this exchange shall apply to the concerned stock exchange for registration as Market Makers unless already registered as a Market Maker.
3. The obligations and responsibilities of Market Makers
The Market Maker shall fulfil the following conditions to provide depth and
continuity on this exchange:
(a) The Market Maker shall be required to provide a 2-way quote for 75% of
the time in a day. The same shall be monitored by the stock exchange. Further, the Market Maker shall inform the exchange in advance for each and every black out period when the quotes are not being offered by the Market Maker.
(b) The minimum depth of the quote shall be Rs.1,00,000/- . However, the
investors with holdings of value less than Rs 1,00,000 shall be allowed to offer their holding to the Market Maker in that scrip provided that he sells his entire holding in that scrip in one lot along with a declaration to the effect to the selling broker.
(c) Execution of the order at the quoted price and quantity must be guaranteed by the Market Maker, for the quotes given by him.
(d) There would not be more than five Market Makers for a scrip. These would be selected on the basis of objective criteria to be evolved by the Exchange which would include capital adequacy, networth, infrastructure, minimum volume of business etc.
(e) The Market Maker may compete with other Market Makers for better
quotes to the investors;
(f) Once registered as a Market Maker, he has to start providing quotes from
the day of the listing / the day when designated as the Market Maker for the respective scrip and shall be subject to the guidelines laid down for market making by the exchange;
(g) Once registered as a Market Maker, he has to act in that capacity for a
period as mutually decided between the Merchant Banker and the market
maker.
(h) Further, the Market Maker shall be allowed to deregister by giving one
month notice to the exchange, subject to (g) above.
4. Dissemination of Information
The exchange should disseminate the list of Market Makers for the respective scrip to the public.
5. Number of Shares per Market Maker
The number of companies in whose shares a Market Maker would make market should be linked to his capital adequacy as decided by the exchange.
6. Risk Containment Measures and monitoring for Market Makers
All applicable margins should be levied and collected without any waiver/exemption.
Capital Adequacy
The exchanges would prescribe the capital adequacy requirement for its members to commensurate with the number of companies which Market Maker proposes to make market. Further, the stock exchange may lay down
additional criteria also for Market Makers as risk containment measures. The
same shall be monitored by the stock exchange.
Monitoring
All the requirements with regard to market making shall be monitored by the stock exchange and any violation of these requirements would be liable for punitive action to be taken by the Disciplinary Action Committee (DAC) of the Exchange, which may also include monitory penalty apart from the trade restriction as decided by the DAC under intimation to the Merchant Banker.
7. Price Band and Spreads
The exchanges shall prescribe the maximum spread between bid and ask price. The exchange, may at its discretion also prescribe the price bands for
the same. Further, in case of new issue the spread shall also be specified in
the offer document with the prior approval of the exchange.

Source: SEBI CIR/MRD/DP/ 14 /2010 dated 26th April 2010

Understand listing agreement amendments with new sub-clauses in 41 & 49 (position before & after 5th April 2010)

As part of a review of the extant policies of disclosure requirements for listed entities and  also  to  bring  more  transparency  and  efficiency  in  the  governance  of  listed entities  it  has  been  decided  to  specify  certain  listing  conditions  so  to  amend  the Equity Listing Agreement.  This post has list of new clauses inserted and ends with a summary table to understand position before and after amendment along with the effective date.

Voluntary  adoption  of  International  Financial Reporting Standards  (IFRS)  by listed entities having subsidiaries - Insertion of Clause 41(I) (g)
Various  regulatory  authorities  are  working  on  arriving  at  a  roadmap  for implementation of IFRS in India and on the steps to be taken for convergence of the Indian Accounting Standards with IFRS by April 01, 2011.

Requirement of a valid peer review certificate for statutory auditors- Insertion of Clause 41(1) (h)

It  has  been  decided  that  in  respect  of  all  listed  entities,  limited review/statutory audit reports submitted to the concerned stock exchanges shall be given only by those auditors who have subjected themselves to the peer review process of ICAI and  who  hold  a  valid  certificate  issued  by  the  ‘Peer  Review  Board’  of  Institute of Chartered Accountants of India.

Interim disclosure of Balance Sheet items by listed entities- Insertion of clause 41(V) (h) and Annexure IX

With  a  view  to  have more  frequent  disclosure  of  the  asset-liability position  of entities, it has been decided that listed entities shall disclose within forty-five days from  the  end  of  the  half-year,  as  a  note  to  their  half-yearly  financial  results,  a statement of assets and liabilities in the specified format.

Approval of appointment of ‘CFO’ by the Audit Committee- Insertion of Clause 49(II)(D)(12A)

 

GIST OF SEBI CIRCULAR 5^TH APRIL 2010 – AMENDMENT OF LISTING AGREEMENT

Credits to Mr. CS Sriram Sharma for the wonderful presentation in table format:

SL. NO	CLAUSES	AMENDMENT OF CIRCULAR
1	Clause 24 (i)	Company while filing for approval with the Stock Exchange any draft scheme of amalgamation / merger / reconstruction, etc under Clause 24(f) is required to file with the Stock Exchange an Auditors’ Certificate that the accounting treatment contained in the scheme of amalgamation is in compliance with the Accounting Standards specified by ICAI. Effective Date: 5th April 2010.
2	Clause 41 (I)(c)	Companies have an option to submit audited or un-audited quarterly and year to date financial results within 45 days of the end of each quarter instead of 1 month of the end of each quarter. [The above clause is for results to be submitted for other than last quarter]
3	Clause 41 (I) (c)	For Companies which opt to submit un-audited financial results, the copy of the Limited Review report should be furnished to Stock Exchange within 45 days from the end of the quarter instead of 2 months earlier. [The above clause is for results to be submitted for other than last quarter]
4	Clause 41 I (d)	In respect of the last quarter, Companies have an option to submit un-audited financial results for the quarter within 45 days of the end of the Financial Year OR if the Company decides to submit audited financial results for the entire Financial Year it should do so within 60 days of the end of the Financial Year
5	Clause 41 I (d)	The Limited Review Report in respect of the last quarter should be furnished to the Stock Exchange within 45 days of the end of the Financial Year
6	Clause 41 I (e) (i)	In case of a Company having subsidiaries, it may in addition to submitting quarterly and y-t-d stand alone financial results to the Stock Exchange within 45 days from the end of the quarter, also submit quarterly and year to date consolidated financial results within 45 days from the end of the quarter
7	Clause 41 I (e) (ii)	For a Company having subsidiaries, it should submit the annual audited consolidated financial results along with the annual audited stand alone financial results within 60 days from the end of the Financial Year to the Stock Exchange
8	Clause 41 I (ea) & (eaa)	A Statement of Assets & Liabilities as at the end of the half-year should be disclosed within 45 days from the end of the half-year to the Stock Exchange. The said information should be disclosed as a part of the audited or un-audited financial results for the half-year to the Stock Exchange so as to keep the shareholders informed about the solvency position of the Company
9	Clause 41 I (g)	If the Company has subsidiaries, it may opt to submit consolidated financial results as per IFRS
10	Clause 41 I (h)	Company to ensure that the Limited Review / Audit Reports is given by an Auditor who has subjected himself to the peer review process of the ICAI and holds a valid certificate issued by the Peer Review Board of the ICAI. Effective Date: For appointment of Auditors after 1st April 2010.
11	Clause 41 V (g)	Disclosure of Balance Sheet items as per Cl 41 I (eaa) to be in the format specified in Annexure IX drawn from the Schedule VI of the Companies Act, 1956
12	Clause 41 VI (b)	Disclosure of Consolidated financial results along with the following items on a stand alone basis as a foot note (a) Turnover (b) Profit before Tax (c) Profit after tax instead of only consolidated financial results
13	Clause 41 VI (b) (iv)	Companies that are required to prepare consolidated financial results for the first time at the end of the Financial Year should exercise the option mentioned in Cl. 41 VI (b) in respect of the quarter during the Financial Year in which they first acquire the subsidiary
14	Annexure V to Clause 41 – Limited Review Report for Companies other than Banks	Disclosures regarding “Public Shareholding” and “Promoter & Promoter Group Shareholding” which have been traced from the disclosures made by the management and have not been audited by us inserted
15	Annexure VI to Clause 41 – Limited Review Report for Banks	Same as point 14 above.
16	Annexure VII & VIII  (both parts)	Except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter & Promoter Group Shareholding’ which have been traced from the disclosures made by the management and have not been audited by us inserted after the words pursuant to the requirement of Clause 41 of the Listing Agreement
17	Annexure IX	Statement of Assets & Liabilities introduced
18	Clause 49 II D (12A)	Audit Committee to approve the appointment of CFO - Approval of the appointment of CFO after assessing the qualifications, experience and background of the candidate.

 

Unless effective date is mentioned above, all other provisions shall be effective from the date of circular as mentioned below..

Source: SEBI CIR/CFD/DIL/1/2010 dated 5th April 2010

Debt Listing: Special Exemptions to regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators, SEBI amendment

SEBI/IMD/DOF-1/BOND/Cir-1/2010 dated 7th January 2010

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.

Further, SEBI vide SEBI/IMD/DOF-1/BOND/Cir-5/2009 dated 26th November, 2009 has amended the Debt Listing Agreement.

In continuation thereof, it has been decided to amend the Simplified Listing Agreement for Debt Securities as follows with immediate effect:
(a) After clause 5, the following proviso shall be inserted:

Clause 5: In respect of its listed debt securities, the Issuer agrees that it shall maintain 100% asset cover sufficient to discharge the principal amount at all times for the debt securities issued and shall disclose to the exchange on half-yearly basis and in their annual financial statements the extent and nature of security created and maintained.

Provisio: Provided that this requirement shall not be applicable in case of unsecured debt instruments issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators.

(b) In clause 16, after sub-clause (a), the following proviso shall be inserted:

Clause 16(a): In respect of its listed debt securities, the Issuer agrees that it shall maintain 100% asset cover sufficient to discharge the principal amount at all times for the debt securities issued and shall disclose to the exchange on half-yearly basis and in their annual financial statements, the extent and nature of security created and maintained.

Provisio: Provided that this requirement shall not be applicable in case of unsecured debt instruments issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators.

(c) In clause 29A, in sub-clause (b) and sub-clause (c), the word “un-audited” shall be omitted.

Clause 29A(b): Such unaudited half-yearly results [meaning, EITHER audited half yearly results OR unaudited with Limited Review Report as per Clause 29A(a)] should have been taken on record by the Board of Directors/ Council of Issuer as the case may be or its Sub Committee and signed by the Managing Director / Executive Director.
Clause 29A(c): The Issuer shall, within 48 hours of the conclusion of the Board/Council or its Sub Committee Meeting, publish the unaudited financial results [meaning, EITHER audited  results OR unaudited with Limited Review Report as per Clause 29A(a)] in at least one English daily newspaper circulating in the whole or substantially the whole of India.

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

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.

Conditions:

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:

SECTION III – CONTENTS OF THE LETTER OF OFFER

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.

II. NON SATISFACTION OF ABOVE CONDITIONS

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 6.42.16.2 of Section III.

III. SPECIFIC TYPE OF LISTED COMPANIES

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.

E. Chapter VIII - OTHER ISSUE REQUIREMENTS
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.

No Delivery Period for all corporate actions of demat securities, SEBI amends

SEBI vide circular no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009 has reduced the notice period from companies to stock exchanges to atleast 7 working days for all types of corporate actions.

It is decided to do away with ‘no-delivery period’ for all types of corporate actions in respect of the scrips which are traded in the compulsory dematerialised mode and accordingly, short deliveries, if any, of the shares traded on cum-basis may be directly closed out.

In case of such direct close-out, the mark-up price would be as stated in SEBI circular no. SMD/POLICY/Cir-08/2002 dated April 16, 2002.

Source: Abolition of no-delivery period for all types of corporate actions vide MRD/DoP/SE/Cir-07/2009 dated July 21, 2009

New Clause 28A in equity listing agreement restricting shares with superior rights to voting/dividend

Yes,

The following clause is inserted under Equity Listing Agreement,

“28A. The company agrees that it shall not issue shares in any manner which may confer on any person, superior rights as to voting or dividend vis-à-vis the rights on equity shares that are already listed. "

 

Thus, now Joint Ventures (JV) and Foreign Collaboration agreements with listed company shall observe cautions!!!

 

Source: Amendments to the Equity Listing Agreement

SEBI/CFD/DIL/LA/2/2009/21/7 dated July 21, 2009

One day Anchor investors for 30 day lock in, include convertible instruments period for offer for sale & listing in stock exchanges with nation wide terminals - SEBI DIP amended

Source: http://www.sebi.gov.in//circulars/2009/cfdcir362009.pdf

Compulsory listing of IPO on at least one stock exchange with nationwide trading terminals

It has been decided to amend clause 2.1.4 of the SEBI (DIP) Guidelines to provide that an unlisted company making an IPO shall list the securities being issued through the IPO on at least one stock exchange having nationwide trading terminals.

Convertible Equity shares considered eligible for offer for sale

A shareholder can make an offer for sale of the equity shares if such equity shares have been held for a period of at least one year as on the date of filing the draft offer document with SEBI.  It has been decided to amend clause 4.14.2 of the SEBI (DIP) Guidelines to provide that in case equity shares which are received on conversion of fully paid compulsorily convertible securities, including depository receipts, are being offered for sale, the holding period of such convertible securities as well as that of resultant equity shares together shall be considered for the purpose of calculation of the eligibility period.

Introduction of concept of Anchor Investor in public issues through book building route

In clause 11.3.5 after sub-clause (iia), the following sub clause (iib) shall be inserted :-

Out of the portion available for allocation to Qualified Institutional Buyers (QIB) under sub-clause (i) or (ii) or any proviso thereof, as the case may be, UPTO 30% may be allocated to Anchor Investors subject to the following:
a) Anchor Investors shall necessarily be Qualified Institutional Buyers (QIB) as defined in these guidelines.
b) The minimum application size by an Anchor Investor shall be Rs.10 crores.
c) One-third (1/3rd) of the Anchor Investor portion shall be reserved for domestic mutual funds (MF).
d) The bidding for Anchor Investors shall open one day before the issue opens and shall be completed on the SAME day.
e) Allocation to Anchor Investors shall be on a discretionary basis subject to minimum number of 2 investors for allocation of upto Rs.250 crores and 5 investors for allocation of more than Rs.250 crores.
f) The number of shares allocated to Anchor Investors and the price at which the allocation is made, shall be made available in public domain by the merchant banker before opening of the issue.
g) Anchor Investors shall pay a margin of at least 25% on application with the balance to be paid within 2 days of the date of closure of the issue.

h) If the price fixed for the public issue through book building process is higher than the price at which the allocation is made to Anchor Investors, the additional amount shall be paid by the Anchor Investors. However, if the price fixed for public issue is lower than the price at which the allocation is made to Anchor Investors, difference shall not be payable to the Anchor Investors.
i) There shall be a lock-in of 30 days on the shares allotted to the Anchor Investors from the date of allotment in the public issue.
j) No person related to the book running lead managers/ promoters/promoter group in the concerned public issue or the book running lead managers to the concerned public issue can apply under Anchor Investor category.
k) The parameters for selection of Anchor Investors shall be clearly identified by the merchant banker and shall be available as part of records of the merchant banker for inspection by SEBI.
l) The applications made by Qualified Institutional Buyers under Anchor Investor category and under Non Anchor Investor category may not be considered as multiple applications.

Click here for the Applicability of the Guidelines

Download the amended SEBI DIP Guidelines, 2000 as on date

Comply DIP for fully/partly convertible debt, Comply Debt regulations for Non-convertible debentures, SEBI clarifies

Clarification on applicability of SEBI Regulations/ Circulars on Initial and Continuous Disclosures for Convertible and Non-Convertible Debt

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.

Now it is clarified that, issue and listing of non-convertible debt securities, whether issued to the public or privately placed, is to be done in accordance with the provisions of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008. Issue of debt securities that are convertible, either partially or fully or optionally into listed or unlisted equity shall be guided by the disclosure norms applicable to equity or other instruments offered on conversion in terms of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (which is proposed to be replaced by New ICDR regulations, 2009).

Source: SEBI/IMD/BOND/Cir-2/2009 dated June 23, 2009

SEBI proposes Issue of Capital & Disclosure Requirements (ICDR) Regulations, 2009 for DIP guidelines, 2000

Download SEBI (ICDR) Regulations, 2009 effective 26th August 2009.

SEBI has already issued Delisting Regulations replacing Delisting Guidelines and now has proposed to issue SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 replacing the current SEBI (Disclosure & Investor) Protection Guidelines, 2000.

You can expect there will not be (m)any amendments on the current DIP guidelines hereon…as they are proposing to consider DIP guidelines as on 31st May 2009.

 

Download Proposed SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 now.

Yes, now the said Proposal is approved and the new ICDR regulations has come into force with effect from 26th August 2009 regulating the PUBLIC ISSUE of specified securities and convertible securities.

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