Understand 30 clauses of debt securities listing agreement with 2 parts & 5 annexures under securitised debt instruments regulations, 2008

Simplified Listing Agreement for Debt Securities

SEBI/IMD/BOND/1/2009/11/05 dated May 11, 2009

as amended SCRA enables, SEBI (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 from 26 may 2008 onwards, SEBI has issued Listing Agreement for debt securities w.e.f. 11th May 2009.

As per Regulation 2(1)(e) of the said regulations, Debt Securities MEANS a non-convertible debt security,

• which create/acknowledge indebtedness AND INCLUDES,
• debentures/bonds/other securities of body corporate/statutory body,
• whether constituting CHARGE on the assets OR not, BUT EXCLUDES,
• bonds issued by Government, Security Receipts (SR) & Securitised Debt Instruments.

The said listing agreement is divided into 2 parts with 30 clauses and 5 annexures.  Kindly note dematerialisation of securities is a pre-condition to listing as per Clause 24.

Part A - Minimum Incremental Disclosures, when equity of the issuer company is listed [Clauses 1 to 11].

Part B – Detailed Disclosures (though fewer than Equity Listing), in all other cases [Clauses 12 to 30].

Part A

(in case issuer’s equity securities are listed)

1. Issuer may, subject to the consent of the debenture trustee, send the information stipulated in Clause 2(a) to (d) in electronic form/ fax.  Issuer (NOT, bank/NBFC) to submit within 1 month a half yearly certificate regarding maintenance of 100% security cover in respect of listed secured debt securities as certified by Practising Company Secretary or practising Chartered Accountant.

2. Issuer (NOT, bank/NBFC) shall disclose EPS along with debt service coverage ratio & interest service coverage ratio in accordance with Clause 4 read with Annexures I, II & III in half yearly/annual results.

3. Issuer to create and maintain security ensuring 100% security cover for listed secured debt securities at all times as per Clause 5.

4. Issuer to send half-yearly report to Stock Exchange WITHIN 1 month of September & March, the details of payment of principal interest, alongwith such other details as per Clause 6.

5. Issuer to use ECS/RTGS/NEFT for the purpose of interest/redemption/repayment and also intimate the expected default as soon as it becomes apparent as per Clause 7 & 8.

6. Issuer to credit DEMAT account of allottees WITHIN 2 working days of allotment as per Clause 9.

7. In case of public issue & listing of debt securities, allotment or refund orders shall be given WITHIN 30 days of closure of public issue or pay interest @ 15% p.a. as per Clause 10.

Part B

(in case of NO listed equity securities or on delisting of equity securities)

1. Issuer to transfer unclaimed interest to IEPF and redeem listed securities on pro rata basis or by lots, UNLESS the issue provides otherwise as per Clause 12.
2. Issuer may, subject to the consent of the debenture trustee, send
   the information stipulated in Clause 13(a) to (d) in electronic form/ fax.  Issuer (NOT, bank/NBFC) to submit within 1 month a half yearly certificate regarding maintenance of 100% security cover in respect of listed secured debt securities as certified by Practising Company Secretary or practising Chartered Accountant.
3. Issuer agrees to send copies of Director’s Annual Report, Balance Sheet and Profit and Loss Account to Debenture Trustees, Stock Exchanges & on request to debt security holders as per Clause 15.
4. Issuer to use ECS/RTGS/NEFT for the purpose of interest/redemption/repayment and issue ‘payable-at-par’ warrants/ cheques for payment of interest and redemption and comply with such other requirements of SEBI/SCRA as per Clause 16.
5. Issuer to credit DEMAT account of allottees WITHIN 2 working days of allotment as per Clause 17.
6. In case of public issue & listing of debt securities, allotment or refund orders shall be given WITHIN 30 days of closure of public issue or pay interest @ 15% p.a. as per Clause 18.
7. Issuer shall promptly notify stock exchange of any change that would affect the rights and obligations of the holders of debt securities and any other information having bearing on the operation/performance of the Issuer as well as price sensitive information, including Clause 19 (a) to (n).
8. In case of book closure/record date, 7 clear working days advance notice to be given to stock exchange as per Clause 20.
9. Issuer to intimate any intention to issue new debt securities and also make listing application for the same.  Any material modification in terms of debentures requires prior approval of Stock Exchange as approved by Board of Directors & Debenture Trustees [Clause 21].
10. As per Clause 22, Issuer to designate the Company Secretary or any
    other person as Compliance Officer.
11. Annual listing fees to be paid on or before 30th April every year [Clause 23].
12. Issuer to send notice of meetings & half-yearly report to Stock Exchange WITHIN 1 month of September & March, the details of payment of principal interest, alongwith such other details as per Clause 27.
13. As per Clause 28, Issuer to give Annual Disclosures in Annual Report with respect to its parent & subsidiary companies along with Cash Flow Statement in accordance with AS-3.
14. The Issuer shall,  [Clause 29]
    • WITHIN 48 hours of the conclusion of the Board/Council/Sub Committee Meeting, publish the unaudited financial results in at least one English daily newspaper (which is signed by MD/Executive Director). 
    • Furnish Unaudited Financial Results (Ann I/II/III) to Stock Exchange WITHIN 1 month of half-year.
    • Furnish Limited Review Report (Ann IV/IV) by statutory auditors (PCA for Public Sector) to Stock Exchange WITHIN 1 month of the month of publication of Unaudited financials.
    • Issuer has the option to furnish audited report WITHIN 3 months of financial year (for last half-year) with advance intimation to stock exchange.
    • address qualifications in audit report, if any.

Issuer shall comply with the said agreement and all provisions of  securities laws.  ‘Securities Laws’ mean the SEBI Act, 1992, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 and the provisions of the Companies Act, 1956 which are administered by SEBI under section 55A thereof, the rules, regulations, guidelines etc. made under these Acts and the Listing Agreement for debt securities.  Issuer also has the option to apply for relaxation of strict enforcement of provisions, in which case Stock Exchange may grant exemption with prior approval of SEBI.

Thus, now Debt Securities has a separate regulation and separate listing agreement.

[SEBI]Portfolio manager shall not maintain pool accounts after 10th May 2009&to keep client’s listed securities separately or stop dealing

Portfolio Managers shall keep every client’s listed securities separately on or before 10th May 2009 OR stop undertaking new clients for portfolio management services and submit monthly progress reports till they become fully compliant.

From 10th May 2009 onwards all the POOL ACCOUNTS of clients securities shall be FROZEN and there shall be NO fresh purchases EXCEPT FOR selling or transferring securities from the said account.

 

As per Regulation 16(8) of SEBI (PORTFOLIO MANAGERS) (AMENDMENT) REGULATIONS, 2008, every portfolio manager shall segregate each clients' listed securities and keep them separately before 10th February 2009, further, the second provisio to this regulation empowers SEBI to relax the said provision.  SEBI vide Circular No. IMD/CIR No.1/155740/2009 dated February 27, 2009 has extended the said time limit to 10th May 2009 and also mandated to furnish a compliance report to SEBI within a week of expiry of the above deadline.

Further, it stated that any non compliance after the extended period may attract penal action under the provisions of the SEBI Act, 1992 and the regulations framed there under.

In continuation of the above, SEBI vide circular no. IMD/PMS/2/2009/11/05 dated May 11, 2009 has been decided that those portfolio managers, who have not complied with the said requirement of Regulation 16(8) by the said deadline of May 10, 2009, shall immediately STOP undertaking new clients for portfolio management services till the time they become fully compliant with the said requirements.  Such portfolio managers shall submit a monthly progress report in regard to status of compliance.

Post the deadline of May 10, 2009, portfolio managers are also advised to comply with the following:
1. Client securities which are held in a pool account as on May 11, 2009 shall be frozen with respect to any further transactions.
2. Selling of securities, however, from such pool account shall be permitted
3. Transfer of securities from such pool account to respective client’s account shall also be permitted.
4. No fresh purchases on behalf of such clients should be made.
The above is without prejudice to SEBI’ s rights to take such actions against them for the said non-compliance as may be deemed appropriate in the matter.

Source: SEBI vide circular no. IMD/PMS/2/2009/11/05 dated May 11, 2009

[SEBI]FII allocation of government debt investment limit&link to FII section in SEBI website

This is in continuation of SEBI FII notification regarding allocation of debt investment limits vide FII’s rush with your debt request to SEBI tonight when clock ticks 23-59 PM IST

In the said notification, SEBI allocated USD 8 billion (out of 15 billion) limit as allotted to FII for debt investment through an open bidding platform as provided by Stock Exchanges as per Clause 3 of SEBI circular No. IMD/FII & C/37/2009 dated February 06, 2009.

As per Clause 3(h) of the said circular, no single entity shall be allocated more than Rs 10, 000 crores of the investment limit.  SEBI vide circular No. IMD/FII & C//2009 dated 12th May, 2009 has decided that,

• Unutilised investment limits for Government debts shall also allocated through open bidding platform as provided by Stock Exchanges as said above.
• No single entity shall be allocated more Rs.1,000 crores of the Government debt investment limit.

Source: SEBI vide circular No. IMD/FII & C//2009 dated 12th May, 2009

All the SEBI circulars on Foreign Institutional Investors (F.I.I/FII) is available in the FII section of SEBI website which can be accessed through http://www.sebi.gov.in/Index.jsp?contentDisp=Department&dep_id=10

New Chairperson & Members are appointed for Competition Commission of India from 2009 onwards

Appointment of Mr. Dhanendra Kumar, Chairperson, CCI from 28th February 2009 for a period of 5 years or attaining 65 years by way of Notification S.O. 870(E) dated 27 March 2009

Appointment of Shri Harish Chandra Gupta, Member, CCI from 28th February 2009 for a period of 5 years or attaining 65 years by way of Notification S.O. 869(E) dated 27 March 2009

Appointment of Shri Ratneshwar Prasad, Member, CCI from 1st March 2009 for a period of 5 years or attaining 65 years by way of Notification S.O. 868(E) 27 March 2009

 

The terms & conditions of appointment as per Salary and allowances payable to Chairperson and Members of CCI as amended by Competition Commission of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and other Members) Rules, 2003 (Amendment)

Company Secretary (ACS) exam admit card/hall ticket for June 2009 exams – how to

Hope you would have got your Admit Card or Hall tickets for CS Foundation Programme, CS Executive Programme or CS Professional Programme exams by now.

The CS Admit Card issued by ICSI gives you the details of Roll Number, Examination centre and the details of the exams that you are allowed to write along with the Date of the Exams.

So, its the time to wish all the best!!! Just be confident of your preparations now, irrespective of how much you have studied.  Just make sure, you spend 3 hours of your time for every exam with 100% concentration and every exam is independant of each other.  The performance of one exam has connection to the performance in the other exam.  So, simply give your best for each & every exam.  Its Only This Much!!!

For those, who have not got the same, not to panic! there is a very easy way to download, which is valid for Exams too from ICSI site itself. Just you have to know your ICSI registration number. (Enter Either Registration number or Roll Number) 17 Digit Registration No (Third character is Zero and not "O") and you will get your Admit Card Extract.

Now, click here to get your Admit Card Examination Enrollment Admit Card Extract

If you are not able to access the above link, click http://icsi.edu/Student/Queries/tabid/1587/Default.aspx and then click “Admit Card Extract Link”.

Enjoy passin…Vj

Case studies & problems on tax law, financial management, company, economic, labour&general laws (with solutions)

Yes, I believe you would have read tax notes from Tax law notes for Company Secretary (ICSI) executive program exams

Now, do you like to solve from direct taxation (Income Tax) problems for your CS Executive Program Module-1 (Tax Laws) paper???

 

If yes, your problem solving is solved by Mr. GK Raju through his blog http://gkr8164.blogspot.com/.  The blog contains numerous problems to workout.  Kindly note, it also includes problems & solutions from Service Tax, Sales Tax, etc…

 

CS Professional Exam friends too can enjoy solving Financial, Treasury & Forex Management (FTFM – Module 2) problems & solutions from the same.  Hopefully, you would have also read CS Final Financial, Treasury & Forex Management [FTFM] Notes & Study in a nutshell, to win Exams

 

Further, do you like to solve practical case studies on various laws, including, Company Law, Economic Law, Labour Law and anyother General Law, then the best place to enjoy learning is   Mr. Tejpal Sheth’s blog http://tejpalsheth.blogspot.com/ which is having a really good collection of interesting practical aspects to make learning, very interesting.

 

Enjoy passin…

[FEMA]Non-resident Depositors/Any can get loan upto 100 lakhs against NR(E)RA & FCNR(B) deposit accounts now

Foreign Exchange Management (Deposit) Regulations, 2000- Loans to Non Residents / third party against security of Non Resident (External) Rupee Accounts
[NR (E) RA / Foreign Currency Non Resident  (Bank) Accounts [FCNR(B)] -Deposits

RBI/2008-09/462 A. P. (DIR Series) Circular No.66 dated 28th April 2009

The banks may now grant loans against NR(E)RA and FCNR(B) deposits either to the depositors or third parties up to a maximum limit of Rs.100 lakh (erstwhile Rs.20 lakhs). The banks are also advised not to undertake artificial slicing of the loan amount to circumvent the aforesaid ceiling.

 

To understand the erstwhile provision, kindly look into Para 6 (a), (b), (c) and (d) of Schedule 1 and Para 9 of Schedule 2 to Foreign Exchange Management (Deposit) Regulations, 2000 notified vide Notification No. FEMA 5 / 2000-RB dated May 3, 2000, as amended from time to time regarding loans against security of funds held in deposit accounts. Further, attention of the banks is also invited to A. P. (DIR Series) Circular No.29 dated January 31, 2007 prohibiting banks from granting fresh loans or renewing existing loans in excess of Rs.20 lakh against NR(E)RA and FCNR(B) deposits either to the depositors or third parties. The banks were also advised not to undertake artificial slicing of the loan amount to circumvent the ceiling.

 

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[FCCB]Buy back upto USD 100 million under RBI Approval Route based on larger discounts

RBI/2008-09/461 A. P. (DIR Series) Circular No 65 dated 28th April 2009

The total amount of permissible buyback of FCCBs, out of internal accruals, is increased to USD 100 million (from erstwhile USD 50 million) of the redemption value per company, under the approval route by linking the higher amount of buyback to larger discounts. Accordingly, Indian companies may henceforth be permitted to buyback FCCBs up to USD 100 million of the redemption value per company, out of internal accruals, with the prior approval of the Reserve Bank, subject to:

Minimum Discount on Book Value	Maximum Redemption Value
25%	USD 50 million
35%	USD 50 to 75 million
50%	USD 75 to 100 million

To read all about FCCB, click here.

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[ECB]All-in-cost ceilings dispensed till 31st December 2009 under Approval Route

RBI/2008-09/460 A.P. (DIR Series) Circular No. 64 dated 28th April 2009

Now, it has been decided to extend the relaxation in all–in-cost  ceilings, under the approval route,  until December 31, 2009. This relaxation will be reviewed in December 2009.

 

Erstwhile provision: Click here

It was decided earlier to dispense with the requirement of all-in-cost ceilings on ECB, under the approval route, until June 30, 2009. Accordingly, eligible borrowers, proposing to avail of ECB beyond the prescribed all-in-cost ceilings could approach the Reserve Bank, under the approval route.

 

To read all about ECB, click here.

 

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Prepaid Instruments-Debit/smart cards shall comply with RBI directions now

Issuance and Operation of Pre-paid Payment Instruments in India (Reserve Bank) Directions, 2009

All persons proposing to operating payment systems involved in the issuance of Pre-paid Payment Instruments shall seek authorization from the Department of Payment and Settlement Systems, Reserve Bank of India, under the Payment and Settlement System Act 2007.

 

Pre-paid Payment Instruments: Pre-paid payment instruments are payment instruments that facilitate purchase of goods and services against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holder, by cash, by debit to a bank account, or by credit card.

The pre-paid instruments can be issued as smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts, mobile wallets, paper vouchers and any such instruments which can be used to access the pre-paid amount (collectively called Payment Instruments hereafter).

The pre-paid payment instruments that can be issued in the country are classified under the three categories viz. (i) Closed system payment instruments (ii) Semi-Closed system payment instruments and (iii) Open system payment instruments.

 

Only banks which have been permitted to provide Mobile Banking Transactions by the Reserve Bank of India shall be permitted to launch mobile based pre-paid payment instruments (mobile wallets & mobile accounts) subject to compliance of Capital Adequacy Requirements of RBI.

Non-Bank Finance Companies (NBFC) would be permitted to issue only semi-closed system pre-paid payment instruments subject to compliance of Capital Adequacy Requirements of RBI.

 

All other persons shall have a minimum paid-up capital of Rs. 100 lakhs and positive net owned funds would be permitted to issue only semi-closed system pre-paid payment instruments.

 

Persons authorized under FEMA to issue foreign exchange pre-paid payment instruments and where such persons issue such instruments as participants of payment systems authorised by the Reserve Bank of India, are exempt from the purview of these guidelines as they are subject to Current Account Transaction Rules.

 

The guidelines on Know Your Customer/Anti-Money Laundering/Combating Financing of Terrorism guidelines issued by the Reserve Bank of India to banks, from time to time, shall apply mutatis mutandis to all persons issuing pre-paid payment instruments.

 

All pre-paid payment instruments issued in the country shall have a minimum validity period of six months from the date of activation/issuance to the holder and the maximum value of any pre-paid payment instrument shall not exceed Rs 50,000/-.

Source:

RBI/2008-09/458 DPSS.CO.PD.No. 1873 /02.14.06/ 2008-09 dated 27th April, 2009

Certified Copies of Entries / Print out to Courts as Evidence by co-operative banks under Bankers Books Act

All State and Central Co-operative banks should comply with the provisions of the Bankers' Books Evidence Act, 1891 while furnishing certified copies and computer printouts to courts. In the absence of such statutory certificate, the court would not be obliged to admit the document in evidence without any further proof.

 

The Certificate shall be as prescribed under Section 2A(a) and (b) of the Act ibid (relevant extract enclosed).

 

Click here to read about Banker’s Books Evidence Act, 1891 http://yehseeyes.blogspot.com/2007/09/interesting-act-in-banking-now-you-will.html

 

Source:

RBI/2008-09/457/RPCD.CO.RF.BC.No. 100 /07.38.03/2008-09 dated 24th April 2009

New Clause 5A&20A in Listing Agreement as amended-unclaimed shares,common notice period, dividend per share basis&voting rights pattern are the updates…

Click here for the amendments in Listing Agreement as on 24th April 2009 http://www.sebi.gov.in/circulars/2009/circfd04.pdf

All the following amendments shall come into force with immediate effect.

To put it simply,

• The unclaimed shares in escrow account shall be transferred to Demat Suspense A/c. after 3 reminders, including corporate benefits, if any and its voting rights will be frozen until claimed.
• The timelines of notice period for record date & board meeting, which were applicable only to rights issue is now made applicable for all corporate actions including mergers, demergers, bonus, buy back, etc…
• “The Issuer agrees to declare and disclose the dividend on per share basis only”.  So, you won’t see hereon 100% or 200%, etc…
• Shareholding pattern to be given for each class of security and voting rights pattern also to be given.

Uniform procedure for dealing with unclaimed shares – Insertion of clause 5A in Listing Agreement
It has been brought to the notice of the Board that there is a large quantum of shares issued pursuant to the public issues, which remain unclaimed despite the best efforts of the Registrar to Issue or Issuers and that there is no uniform practice for dealing with such shares.

It has been decided to provide a uniform procedure for dealing with unclaimed shares i.e., shares which could not be allotted to the rightful shareholder due to insufficient/incorrect information or any other reason (in escrow A/c.). Accordingly, the new Clause 5A is to be inserted, which, inter alia, provides the following:

• The unclaimed shares shall be credited to a demat suspense account opened by the issuer with one of the depository participants after giving 3 reminders at the address mentioned in the depositories database. [Cl 5A(a)]
• Any corporate benefit in terms of securities, accruing on unclaimed shares such as bonus shares, split etc., shall also be credited to such account. [Cl 5A(b)]
• Details of shareholding of each individual allottee whose shares have been credited to such suspense account shall be properly maintained by the issuer. [Cl 5A(c)]
• The allottee’s account shall be credited as and when he/she approaches the issuer, after undertaking the proper verification of identity of the allottee. [Cl 5A(d)]
• The voting rights of these shares will remain frozen till the rightful owner claims the shares. [Cl 5A(f)]
• Details (in aggregate) of shares in the suspense account including freeze on their voting rights, shall be disclosed in the Annual Report as long as there are shares in the suspense account. [Cl 5A(g)]

Notice period for Record Date and Board Meeting – Amendments to clause 16 and clause 19
It has been decided to reduce the timelines for notice period for all corporate actions like dividend, bonus, rights, mergers, demergers, splits, etc, for all scrips whether in demat or physical, whether in F&O segment or not.

The notice period for record date has been reduced to 7 working days (now there is no confusion of whether 30 days or 21 days or 15 days or 7 days) and for board meeting has been reduced to 2 working days (now there is no confusion of whether 7 days or 2 days). 

Kindly note, it is the board meeting intimation where buy back is proposed to be considered as per Cl 19(d) is also 2 working days (not 7 days as earlier).

Uniformity in dividend declaration – Insertion of clause 20A
It has been decided to mandate that listed companies shall declare their dividend on per share basis only. This is expected to bring uniformity in the manner of declaring dividend amongst the listed companies.

 

Cl 20A - “The Issuer agrees to declare and disclose the dividend on per share basis only”.

 

Shareholding pattern for each class of shares and voting rights pattern – Amendment to clause 35
It is clarified that clause 35 of the listing agreement which gives a format for disclosures of shareholding pattern, is required to be given for each class of security separately. Further, it has been decided to amend clause 35 to provide an additional format for disclosures of voting rights pattern in the company.  For the new formats, click http://www.sebi.gov.in/circulars/2009/circfd04.pdf or wait for the amendments in Listing Agreement.