Imposing of Price Band on the day of Listing

SEBI proposes to impose price band on the day of Listing

PROPOSED POLICY FOR IMPOSITION OF PRICE BANDS ON THE DAY OF LISTING OF INITIAL PUBLIC OFFERS (IPO's)

q Introduction

This is a proposal by SEBI for imposing a price band of 25% on the issue price on the day of listing of IPOs of issue size upto Rs 250 Cr. This proposal does not apply in case of re-commencement of trading of the equity shares of a company on the stock exchanges.

q Background

Currently, the stock exchanges do not apply price bands on the day of listing of Initial Public Offerings (IPOs). The price fixed by the company in consultation with its lead managers is left open to price discovery in the matter and after the day of listing, this process of price discovery may continue within a price band of 20%. For IPO issue sizes that are greater than Rs.500 Cr, price bands are not imposed even after the day of listing if such scrips are available for trading on the derivative segment.

q Issue for Consideration

Recently, it has been noticed by SEBI that there are significant price & volume spikes/ volatility on the day of listing of IPOs. This was particularly noticed in IPOs of issue size upto Rs 250 cr. In particular, for several such IPOs, where the stock available for trading in the hands of public, after excluding shares of promoters and others that face a lock in period is about 25-30% of the equity capital of the company, the price may not sustain on subsequent days leading long-term investors to become dissatisfied with the dramatic activity on the day of listing.

While it is appreciated that demand /supply mechanics should freely determine the market price, large scale price/volume fluctuations on the first day of trading seem to warrant a systemic response to contain such sharp movements. Accordingly, there seems to be a need to consider a price band even on the day of listing of IPOs. This would not only assist in a more orderly price discovery process over a period of time, instead of on the day of listing, but more importantly also have a salutary impact on potential abnormal price movements on the day of listing.

The matter has been also deliberated at length in the meetings held by SEBI with the stock exchanges. A back testing was also carried out by the stock exchanges on the IPOs during the past year, using parameters such as issue size, price variation on day of listing, maximum variation on day of listing as well as price variation on subsequent days. It was noticed by SEBI that IPOs of issue size upto Rs 250 Cr exhibited more volatility than IPOs of greater issue size. After taking into account the views of the stock exchanges and the results of back testing, it was felt that there is a need to impose price bands on the day of listing of IPOs in a cautious and gradual manner to facilitate steady and sustained price discovery over a period of time.

Comments/suggestions are invited from the public on the above proposal by SEBI, so as to reach SEBI by January 31, 2008.

Comments /suggestions may be sent by email to the following addresses

sanjayp@sebi.gov.in (Mr Sanjay Purao)

sapnas@sebi.gov.in (Ms Sapna Sinha)

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5, 50, 500, 5000 - Store N number of mails in your inbox. Click here.

Banking for CS

SECTION 5(i)(b) of The BANKING REGULATION ACT, 1949: “Banking”:
1.Acceptance of deposit from public;
2.for the purpose of lending/investment;
3.repayable on demand/otherwise; &
4.withdrawable by means of any instrument whether cheque/otherwise.

NARASIMHAM COMMITTEE - - LIBERALISATION - - BANK
PHASEI:
1.The objective is to promote diversified, efficient & competitive financial system;
2.Thrust on improving the operation & allocates efficiency by focus;
3.Monetary control reforms & restructuring the financial condition;
4.Building infrastructure & reviewing HR policies;
5.Reduce intermediate cost & promote competition;
6.Create an environment & infrastructure for Government securities;
PHASEII:
1.Mergers & closure of banks: introduce Narrow Banking;
2.Create three tier banking structure AS TO International, Large & Medium and Cluster of districts;
3.Separate regulatory role of RBI & supervisory role of GOI;
4.Revamp bank functioning by inducting professionals, depoliticising, right sizing, VRS, review HR policies, etc…
5.Strengthen Bank Balance Sheet – revamp bank laws.

NARROW BANKING: Invest deposits in safe & liquid assets, thereby reduction of risk of failure. It is for weak banks. The advantages include,
1. Stable returns; 2. Easy monitoring by RBI; 3. Immune to runs.
The disadvantages include,
1.Divide banking sector into specialised Deposit & Loan making institutions;
2.Split depositors into Risk averse/loving or a combination;
3.Limited area of operations.

RELATIONSHIP BANKING: “Transaction oriented”, hence each transaction is weighted against profit & cost and decisions are taken. Thus focus on value based relations & mutual growth.

SOCIAL CONTROL – “additional control & restrictions” as to,
1.Whole time chairman & Board of directors should have special knowledge & practical experience.
2.Restriction on loans/advances to its directors or to interested firm/individuals (S-20) & also loans not against its own shares.
3.Punishment for obstructing any one from entering/leaving bank or holding demonstration within bank or acting to undermine depositors confidence in banks.Report of RBI & Central 4.Government to acquire undertakings of banking company.

Must Know Terms...
1. SECTION 17 – Reserve Fund >=20% (Profit as per S-29) before declaring dividend. The Central Government on recommendation of RBI, declare by order in writing to exempt from this provision only if Reserve Fund+Share Premium >=Paid up capital. The appropriation from Reserve Fund/Share Premium, then report to RBI within 21 days.
2. SECTION 18 – Cash Reserve >=3% of total demand & time liability as on last Friday of II-preceding fortnight with itself or balance in current a/c. with RBI or Net balance in current a/c. & submit return within 20th of every month.
3. SECTION 24 – Statutory Liquidity Ratio (SLR) ranging between 25-40% of demand & time liabilities as on last Friday of II-preceding fortnight by way of cash/gold/unencumbered securities.
4. For sections 18 & 24, the liability does not include, Paid up capital or Reserves or P/L credit, advance from RBI/Development/EXIM/Nationalised bank and if Regional Rural Bank, the loan from its sponsor bank; RBI may specify the liability & its decision is final; “Fortnight” means Saturday to II-following Friday (both inclusive). SECTION 19 – Bank can hold shares as pledgee or absolute owner or mortgagee <= 30% if PC+FR of its own or PC of that other company, whichever is lower; PC=Paid Up capital; FR=Free Reserves. It also permits to form subsidiary company. RETURNS TO RBI:
S-24: Monthly return of liquid assets & liabilities;
S-25: Quarterly return of assets & liabilities in India; Annual statement of all Inoperative accounts for 10years within 30 days of Calendar Year to RBI;
S-26: Unclaimed deposits >= 10years; S-27: Monthly return of assets & liabilities.

SECURITISATION
Simulating, Assets into Securities & Securities into Liquidity on an on-going basis, increasing turnover of business & profits
Under SARFAESI (Securitisation And Reconstruction of Financial Assets & Enforcement of Security Interest) Act, “securitisation” means acquisition of financial assets by an securitisation/reconstruction company from any originator, WHETHER by raising funds by such securitisation/reconstruction company FROM QIB by issue of Security Receipt (SR) REPRESENTING undivided interest in such financial asset or otherwise.
Thus, it is a process of conversion of illiquid non-negotiable & high valued financial assets into securities of small value which are tradeable & transferable.
STEP1: Company sells receivables to SPV (Special Purpose Vehicle) & takes cash;
STEP2: SPV converts assets into securities & sells in marketable lots;
STEP3: Repayment directed by company to SPV A/C.
STEP4: SPV pays by way of returns.
STEP5: Shortfall in non-recovery borne by company in a separate a/c.
TYPES include,
1. Mortgaged Backed Securitisation – by NHB through SBI Caps to LIC HFC.
2. Debenture Securitisation – ICICI close ended scheme.
ADVANTAGES include,
1. Matched funding as to asset maturity;
2. Raise additional resources;
3. Trims Balance Sheet of company;
4. New opportunity to investors.

ALM – Asset Liability Management or Balance Sheet Management is the process that helps the management to protect & preserve business providing damage control, enhance returns & strengthen the institution; It means, (managing business after assessing the risk involved)
1. Identifying the “asset-liability mismatch” risk;
2. “Quantify” the risk;
3. Deciding the “Acceptable” level of risk;Monitoring & “controlling” such risk.

RULE OF CLAYTONS CASE:
When there is only one a/c., current a/c. payments are presumed to have been appropriated to the debit items in the order of date. The presumption of law being “the first item on debit site is discharged/reduced by the first item on the credit side; the credit entries in the a/c. adjust/set-off the debit entries in chronological order”. As a safeguard (to escape from Clayton’s rule),
1. The banker should break the a/c. & open fresh a/c. on death/retirement/insolvency of a partner;
2. If the guarantor/surety of debt becomes insolvent/dies, the Claytons rule would prevail.

DECISION:
PROCESS1: Debtor making payment has the right to appropriate;
PROCESS2: Otherwise: Creditor has the right to appropriate;
PROCESS3: Otherwise: Appropriation by presumption of law.

M/S. KHARAVELA INDUSTRIES (P) LTD v. ORISSA STATE FINANCE:
FIRST, adjust/set off towards interest & then to Principal.
If both trust & personal monies deposited, the money first drawn treated as personal money & then trust money.

Also read The Negotiable Instruments Act from http://www.dateyvs.com/gener10.htm

Enjoy passin...

Surrender profit,if you are designated investor..SEBI ....follows.... SEC

SEBI is in the verge of amending the insider trading regulations so as to make any 'Designated Insiders' to surrender his profit if he enters to a buy and sell transaction within six months in line with sec 16(b) of Securities Exchange Act of U.S.


Conditions when Triggerred-:

1) When you are an Designated Insider-

'Designated Insider' will be defined in a broader way than current insider definition but will be narrower than current deemed Insider definition.Directors,officers and 10% owners will be included.

2)When you buy and sell within Six months

3)Intent of the person is Immaterial-
No need to find Guilt

4)Short Swing Profit to be surrendered

If any professional has any suggestion to make regarding
1) the definition of term 'designated insider' or
2) exemption to be granted (like Merger,Amalgamation,Regulatory Approval,Gift etc) or
3) calculating the purchase and sale price or
4) counting of six months

can offer it to vidishak@sebi.gov.in..........

SEBI reduces the load of the investor

Waiver of entry load for direct applications for Mutual Fund investments

At present irrespective of the mode of entry, investors are required to pay the entry load.Keeping in mind the interests of investors and to facilitate the growth in Mutual Fund industry, with effect from January 04, 2008, investors making applications for investments in Mutual Fund schemes directly without routing through any distributor/agent/broker i.e. through internet, submitted to AMC or collection centre/ Investor Service Centre would not be subject to entry load as per SEBI's new circular. This waiver shall also apply to additional purchases done directly by the investor under the same folio and switch-in to a scheme from other schemes if such a transaction is done directly by the investor.

The growth of mutual fund industry in the past years and the technology available for investments has enabled investors to take informed decisions and to invest in mutual funds through internet and other modes without availing of services of distributors/ agents/ brokers.

There was an overwhelming response in favour of the proposal by SEBI on waiver of entry load for investors who do not route their mutual fund applications through a broker/ distributor.

Read full text of the circular at...http://www.sebi.gov.in/Index.jsp?contentDisp=WhatsNewScroll&FilePath=/circulars/2007/mfdcir1007.html

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Download prohibited? No problem. CHAT from any browser, without download.

Permission for Short Selling of shares by FIIs

Dear All,

Every one aware of that the SEBI has announced permission for short selling of securities by the Financial Institutions including SEBI Registered FIIs.

In terms of A.P.(DIR Series) Circular No.53 dated December 17, 2003 wherein SEBI registered FIIs/sub-accounts of FIIs were permitted to buy/sell equity shares/debentures of Indian companies. In terms of para 5 of the Annex to abovesaid, FIIs are not allowed to engage in short selling and are required to take delivery of securities purchased and give delivery of securities sold.

Vide AP DIR Circular No.23 dated 1^st Janaury 2008 ( Today), It has now been decided in consultation with Government of India and SEBI, to permit Foreign Institutional Investors (FIIs) registered with SEBI and sub-accounts of FIIs to short sell, lend and borrow equity shares of Indian companies. Short selling, lending and borrowing of equity shares of Indian companies shall be subject to such conditions as may be prescribed in that behalf by the Reserve Bank and the SEBI / other regulatory agencies from time to time.

The above permission is subject to the following conditions:

(i) The FII participation in short selling as well as borrowing /lending of equity shares will be subject to the current FDI policy and short selling of equity shares by FIIs shall not be permitted for equity shares which are in the ban list and /or caution list of Reserve Bank.
(ii) Borrowing of equity shares by FIIs shall only be for the purpose of delivery into short sale.
(iii) The margin/collateral shall be maintained by FIIs only in the form of cash. No interest shall be paid to the FII on such margin/collateral.

The designated custodian banks shall separately report all transactions pertaining to short selling of equity shares and lending and borrowing of equity shares by FIIs in their daily reporting with a suitable remark (short sold/lent/borrowed equity shares) for the purpose of monitoring by the Reserve Bank.

Thanks & Regards
Alagar
09884731993
Karvy Investment Banking

No more EDIFAR...File it thru corpfiling SEBI says

SEBI amended DIP Guidelines and Listing Agreement yesterday.The Major changes made are-:

1) The report of the monitoring agency to filed with the Issuer Company instead of SEBI in case of Public or Rights Issue beyond Rs.500 Crs;
2) Those repot has to be placed before the Audit Committee;
3) Material deviations, If any, mentioned in the Monitoring Report shall be disseminated by the Company to the Stock Exchange and to be given as advertisements in the Newspapers;
4) Clause 43 and 51 were amended and Clause 43A and 52 were added to the Equity Listing Agreement, so as to make all the filings made by the Listed company only through the portal Corporate Filing and Dissemination System (CFDS) at the URL http://www.corpfiling.co.in/. (Jointly promoted by BSE and NSE) as SEBI is planning Phase out EDIFAR.

Read more at http://www.sebi.gov.in/Index.jsp?contentDisp=WhatsNewScroll&FilePath=/press/2007/3232007.html.........

SEBI Circular in http://www.sebi.gov.in/circulars/2007/CIR-CFD4-2007.pdf

FDI - by citizen/ Entity Incorporated in Bangladesh

Dear All,

The RBI has amended FEM (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide FEMA Notification No. 167 dated October 23, 2007 to give effect changes relating to investment by citizen/ Entity Incorporated in Bangladesh.

As per existing provisions of Regulation 5 of FEM (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 a citizen of Bangladesh or Pakistan or an entity incorporated in Bangladesh or Pakistan, are not allowed to purchase shares or convertible debentures of an Indian company under Foreign Direct Investment Scheme.

As per above said RBI notification and subsequent AP DIR Circular No. 22 dated 19th Dec 2007, a person who is a citizen of Bangladesh or an entity incorporated in Bangladesh may, with the prior approval of the Foreign Investment Promotion Board of the Government of India, purchase shares and convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1 to Notification No. FEMA 20 / 2000 -RB dated May 3, 2000 as amended from time to time.

Thanks & Regards
Alagar
Karvy Investor Services Limited
Moble: 919884731993

Power of Attorney (PoA) - nice FAQ

As a Power of Attorney may relate to substantial
monetary dealings, clarity on the nature of the
document is vital

— Photo: H. Vibhu

Care and caution: A Power of Attorney becomes an
important document in property transaction.

A Power of Attorney, especially, when relating to real
estate transactions, is a very important document. As
it may relate to substantial monetary dealings,
clarity on the nature of the document is vital. Many
queries have also been raised with regard to the Power
of Attorney. Attempt is made to address these issues
in this FAQ.

1.What is a Power of Attorney?

A Power of Attorney is a document under which one
person known as "Principal" or "Donor" grants an
authority to another person, known as "Agent",
"Attorney" or "Donee" to do or undertake the acts,
deeds and things specified in the document, on behalf
of the Principal or Donor.

2.What are the various types of Powers of Attorney?

There are many types of Powers of Attorney. A broad
classification would be General Powers of Attorney and
Special Powers of Attorney. A General Power of
Attorney confers substantial powers for effecting the
transactions contemplated. A Special Power of
Attorney, on the other hand, is given for specific
purposes only and is often restrictive in scope.

3.What are the ingredients for grant of a valid Power
of Attorney?

The Principal and the Agent must be competent to
contract. It has to be given voluntarily. The Power of
Attorney should be given for legal purposes. It must
be duly stamped, notarised or registered or
adjudicated, as the case may be. Powers of Attorney
executed abroad may also be authenticated by a
Consulate Officer. Minors and other persons
disqualified by law cannot grant a Power of Attorney.
There are certain acts which can be done only by the
persons concerned. For these acts, Powers of Attorney
cannot be granted.

4.What are the acts which can be done only by persons
concerned, referred to above?

These are acts which a person concerned alone can
perform. For example, take the case of a singer or a
musician contracting to perform. The performance has
to be given by the singer or musician only and
obviously cannot be performed by a Power of Attorney.
This is an extreme example to give a broad idea as to
what the personal acts can be. There are any number of
such matters which are to be performed or executed by
person concerned only.

5.Is registration of Power of Attorney mandatory for
exercising the powers?

A Special Power of Attorney under which the Principal
authorizes the Agent to present for registration, a
document executed by the Principal has to be
compulsorily registered. In other cases, it is
sufficient if the power is notarised or authenticated
by an Indian Consul or Vice Consul or by a Court,
Judge or Magistrate. However, in respect of local
Powers of Attorney, it is advisable to have the same
registered as notarization or authentication may not
meet market acceptance.

6. Can a Company grant a Power of Attorney?

If so authorised by its Memorandum and Articles of
Association, a Company can grant a valid Power of
Attorney.

7.Can a Partnership Firm grant a Power of Attorney?

This can be given. Subject to the terms contained in
the Partnership Deed, it may be binding on all
partners, if given by one of the partners.

8.What are the important features of a Power of
Attorney?

One would have noticed that in matters relating to
commercial transactions, there is usually a payment or
passing of consideration. For a Power of Attorney to
be valid, no consideration is required. Further, many
documents would be irrevocable in nature. However, a
Power of Attorney can be normally revoked.

9.Is there a type of Power of Attorney called
"Irrevocable Power of Attorney"?

As already stated, normally a Power of Attorney can be
revoked. In matters where the Agent has acquired an
interest, the Power of Attorney is known as a power
coupled with interest and cannot be revoked without
the express consent of the Agent. This is an usual
parlance referred to as an "Irrevocable Power of
Attorney". In certain cases, the Power of Attorney may
amount to a conveyance and these Powers of Attorney
can also be brought within the ambit of Irrevocable
Powers of Attorney.

10.How are the wordings in a Power of Attorney
construed?

This depends on the clarity of the wordings employed.
The general construction is that the Agent is
empowered to do or undertake only acts which are
clearly authorised. However, certain incidental powers
can be inferred to give effect to the terms contained
in the Power of Attorney. If the Power of Attorney
confers power of sale, then it can be inferred that it
includes necessary powers for completing the sale
transaction. In the same case, though the Agent may
have the power to sell, the Agent, unless,
specifically authorised, will not be entitled to
mortgage the property.

12.What are the matters to be noted in respect of
Powers of Attorney executed abroad?

The Power of Attorney can be executed in a green sheet
or a white sheet and stamped or adjudicated, within
three months after receipt in India. It has to be
authenticated by an Indian Consul, Vice Consul or a
Notary.

In many cases, the Power of Attorney executed abroad
is sent with only last page signed by the Principal.
This practice is not desirable and every page has to
be signed by the Principal. This will save a lot of
time and avoid unnecessary delay and expense.

13.While dealing with an immovable property, is it
sufficient only to take a Power of Attorney
containing, among other powers, the power to sell?

Considering that the nature of the Power of Attorney
is such that it can be revoked, it is advisable to
back this Power of Attorney with a proper Agreement.
This will be give better rights in matters relating to
commercial dealings.

14.What the general precautions to be taken while
granting a power?

Please check the wordings. Understand the
implications. If the Power of Attorney contains power
to mortgage, one has to exclude personal liabilities
wherever the intention is not to undertake such
personal liabilities. Try and get periodical feedback
from the Agent. If you are revoking the power,
consider all the facts and circumstances and the
impact that this may cause before venturing into this.

15.What are the general precautions to be taken while
acting as an Agent?

Understand the scope of the power. Note that you are
actually acting on behalf of somebody else and protect
the interest of the Principals. Do not exceed the
powers granted under the document. Provide periodical
feedback to the Principal. Get necessary further
documentation to ensure that the Agent does not suffer
on account of unexpected revocation. In case of death
of Principal, act promptly to obtain suitable
documentation to cover the situation. If possible, get
periodical confirmations of the validity of the power.
Powers of Attorney, especially those covering
commercial transactions, are intended for short
durations and keeping the powers unused for a long
time may not be in the best interest of the Agent.

The author is Partner, RANK Associates, Advocates.

SEBI allows Short Selling

Sell it ! even if you don't own it.....this is what our SEBI says....

Now, the broad framework for "Short selling and securities lending and borrowing" has been prescribed by SEBI.

Extract is here,

1. Pursuant to the recommendations of the Secondary Market Advisory Committee (SMAC) of SEBI and the decision of the SEBI Board, it has been decided to permit all classes of investors to short sell subject to the broad framework specified in Annexure-1.
2. In order to provide a mechanism for borrowing of securities to enable settlement of securities sold short, it has also been decided to put in place a full-fledged securities lending and borrowing (SLB) scheme for all market participants in the Indian securities market under the over-all framework of “Securities Lending Scheme, 1997” of SEBI specified by SEBI vide circular No. SMD/POLICY/SL/CIR-09/97 dated May 07, 1997. Such a regulatory framework shall be subject to the broad framework specified in Annexure-2.
3. The Stock Exchanges shall issue the necessary guidelines in this regard and shall put in place systems to operationalise the above mechanisms for short selling and SLB. The stock exchanges shall also ensure that all appropriate trading and settlement practices as well as surveillance and risk containment measures, etc. are made applicable and implemented in this regard.
4. The Stock Exchanges and the Depositories are advised to put necessary systems in place so as to distinguish the lending and borrowing transactions executed in the framework specified in the annexure from the normal market transactions in the demat system.
5. The date of implementation of this circular will be communicated by SEBI subsequently.

6. The Stock Exchanges and the Depositories are also advised to :
6.1. test the necessary software/systems and remove any glitches in its operation well before the commencement date to avoid any problems in the live environment.

6.2. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.

6.3. bring the provisions of this circular to the notice of the member brokers/clearing members, depository participants and also disseminate the same on their website.

6.4. communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report.
7. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 and Section 19 of the Depositories Act, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

See @ http://www.sebi.gov.in/Index.jsp?contentDisp=WhatsNewScroll&FilePath=/circulars/2007/shortselling.html

24% investment cap on SSIs removed - FDI

Dear All,

24% investment cap on SSIs removed - FDI

As per existing provisions, FDI is allowed upto 24% of capital in SSI units, if SSI units wants to take additional FDI over and above 24%, then it needs to sacrifice SSI status and can go to upto the sectoral cap as specified under FEMA Regulations for that particular business/industry.

As per recent announcement by Commerce Ministry, 24% of Investment cap is removed for SSI. So that now SSI can go upto sectoral cap as specified under FEMA regulation under automatic route without losing their status as SSI..

Extract from BS – 19-12-2007

In a development, which is likely to increase participation of foreign players and big companies in small-scale industries (SSIs), the government has formally announced doing away with the 24 per cent investment cap in the sector.

However, industry sources remained sceptical about the move as cheap imports from countries like China has made production of many goods exclusively reserved for the sector unviable.

To make this move effective, the government has taken a decision to repeal a restrictive clause, which limits equity participation in SSIs to 24 per cent.

Announcing the development, Commerce Minister Kamal Nath said: "This will lead to technology infusion in the sector as more and more foreign players and large companies set up their own SSI units."

The government notification will enable big industrial houses, both from the country and abroad, to set up SSI units in the sector, which has been restricted because of a limit of 24 per cent equity participation by other companies.

An industrial unit is classified as an SSI when the investments is within Rs 5 crore. At present, there are 114 goods that are exclusively reserved for the sector.

"The doing away of the investment limit means that the de-reservation process of SSIs, which started in 1967, is complete. Thus large corporate houses will be able to set up SSI units in both reserved and unreserved products," said Anil Bhardwaj, secretary general of Federation of Indian Micro and Small and Medium Enterprises.

But he also added that this move is inconsequential in terms of effective benefits for the SSI sector: "Cheap imports have made production of many reserved items unviable. Indian SSIs are not able to compete with international companies in the domestic market."

Reserved items in the sector include electric tea and coffee maker as well as pens, which are being imported in large quantities.

Thanks & Regards

Alagar
Karvy
Moble: 919884731993

Interesting Judgement..Whether CLB is a court under Contempt of Courts Act ?

Important Jugement by High court answering following queries..

Whether CLB is a court under Contempt of Courts Act ?
Whether CLB is subordinate court to High Court under Contempt of Courts Act?
Whether High Court can take suo-moto cognizance of contempt of CLB without any reference made to it?

Read more it ....http://www.taxmann.net/DispCitation/ShowPages.aspx?fn=http://www.taxmann.net/WhatnewNews/[2007]080SCL0405(AP).htm&ctid=-333

FEMA- FDI - Refund of Advance Remittances

Dear All,


Foreign Direct Investments (FDI) – Issue of shares under FDI and refund of advance remittances

The RBI vide AP DIR Circular No 20 dated 14^th December 2007 has made the following changes in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 in connection of refund of consideration from a person resident outside India towards investment in equity shares / compulsorily convertible preference shares and compulsorily convertible debentures (equity instruments).

As per existing provisions of FEM (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 a person resident outside India can purchase equity shares / compulsorily convertible preference shares and compulsorily convertible debentures (equity instruments) issued by an Indian company under the FDI policy and the Indian company is allowed to receive the amount of consideration in advance towards issue of such equity instruments, subject to the terms and conditions laid down therein. The Indian company is required to report the receipt of the amount of consideration within thirty days of receipt of the inward remittance or the date of debit of the NRE / FCNR (B) account of the foreign investor with a AD category – I bank in India, to the Regional Office concerned of the Reserve Bank, in accordance with the prescribed procedure. The money received from foreign Investor can be kept as share application pending for allotment and allotment of shares can be done at any point of time before 7 years of receipt so as avoid transfer such money to IEPF.

The matter has been reviewed in consultation with the Government of India and it has been decided that, with effect from November 29, 2007, the equity instruments should be issued within 180 days of the receipt of the inward remittance. In case, the equity instruments are not issued within 180 days from the date of receipt of the inward remittance or date of debit to the NRE/FCNR (B) account, the amount of consideration so received should be refunded immediately to the non-resident investor by outward remittance through normal banking channels or by credit to the NRE/FCNR (B) account, as the case may be. The AD Category – I banks may allow such outward remittances after satisfying themselves with the bonafides of the transactions and that no part of the remittance represents interest on the funds received as advance. Non-compliance with the above provision would be reckoned as a contravention under FEMA and could attract penal provisions.

In exceptional cases, refund of the amount of consideration outstanding beyond a period of 180 days from the date of receipt may be considered by the Reserve Bank on the merits of the case. Accordingly, AD Category – I banks may apply to the Regional Office concerned of Foreign Exchange Department of the Reserve Bank for refund of such advance.

In all cases where, as on November 28, 2007, 180 days have elapsed since receipt of funds and the equity instruments have not been issued, the companies are required to approach the Foreign Exchange Department of the Regional Office concerned of the Reserve Bank through their AD Category - I bank with a definite action plan either for allotment of equity instruments or for refund of the advance, with full details, for specific approval.

It is clarified that the advances against equity instruments may be received only where the FDI is allowed under the automatic route.

For more info http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/82142.pdf

Thanks & Regards

Alagar
Karvy Investor Services Limited
Moble: 919884731993
for more information about cschennai visit to
http://groups.google.com/group/cschennai