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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.
SEBI/MRD/DoP/SE/RTA/Cir-03/2010 dated 7th January, 2010
Sub: PAN requirement for transmission of shares in physical form
The Securities and Exchange Board of India (SEBI) vide circular ref. no. MRD/DoP/Cir-05/2007 dated April 27, 2007 made PAN mandatory for all securities market transactions. Thereafter, vide circular no. MRD/DoP/ Cir-05/2009 dated May 20, 2009 it was clarified that for securities market transactions and off-market/ private transactions involving transfer of shares in physical form of listed companies, it shall be mandatory for the transferee(s) to furnish copy of PAN card to the Company/ RTAs for registration of such transfer of shares.
Based on representations/ clarifications sought by market participants and in continuation to the aforesaid circulars, it is hereby clarified that it shall be mandatory to furnish a copy of PAN in the following cases –
Incase of mismatch in PAN card details as well as difference in maiden name and current name (in case of married women) of the investors -
(ie) A copy of any one of the following may be accepted for proof of identity / proof of address:
A. Proof of Identity
I. Passport
II. Voter ID Card
III. Driving license
IV. PAN card with photograph
V. MAPIN card
VI. Identity card/document with applicant's Photo, issued bya) Central/State Government and its Departments,
b) Statutory/Regulatory Authorities,
c) Public Sector Undertakings,
d) Scheduled Commercial Banks,
e) Public Financial Institutions,
f) Colleges affiliated to Universities,
g) Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and
h) Credit cards/Debit cards issued by Banks.B. Proof of Address
I. Ration card
II. Passport
III. Voter ID Card
IV. Driving license
V. Bank passbook
VI. Verified copies ofa) Electricity bills (not more than two months old),
b) Residence Telephone bills (not more than two months old) and
c) Leave and License agreement / Agreement for sale.VII. Self-declaration by High Court & Supreme Court judges, giving the new address in respect of their own accounts.
VIII. Identity card/document with address, issued bya) Central/State Government and its Departments,
b) Statutory/Regulatory Authorities,
c) Public Sector Undertakings,
d) Scheduled Commercial Banks,
e) Public Financial Institutions,
f) Colleges affiliated to universities; and
g) Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members.
The Stock Exchanges shall review the lot size for derivative contracts on individual securities once in every 6 months based on the average of the closing price of the underlying for last 1 month and wherever warranted, revise the lot size by giving an advance notice of atleast 2 weeks to the market.
If the revised lot size is higher than the existing one, it will be effective for only new contracts. In case of corporate action, the revision in lot size of existing contracts shall be carried out as per SEBI circular SMDRP/DC/CIR-15/02 dated December 18, 2002.
Sub: Review of Securities Lending and Borrowing (SLB) Framework
The framework for SLB was specified vide circular no. MRD/DoP/SE/Dep/Cir- 14 /2007 dated December 20, 2007 and was operationalised with effect from April 21, 2008. The SLB framework was revised vide circular no. MRD/DoP/SE/Cir-31/2008 dated October 31, 2008. Pursuant to feedback received from market participants and proposals for revision of SLB received from NSE and BSE, the framework is now modified as under:
The tenure of contracts in SLB may be upto a maximum period of 12 months. The Approved Intermediary (Clearing corporation/ Clearing House) shall have the flexibility to decide the tenure (maximum period of 12 months).
For more details, visit SEBI/MRD/DoP/SE/Dep/Cir- 01 /2010 dated 6th January 2010.
SEBI/MIRSD/CRA/Cir-01/2010 dated 6th January 2010
SEBI has decided in consultation with the credit rating agencies (CRAs) that the audit envisaged under Regulation 22 of the SEBI (Credit Rating Regulations), 1999 shall include an internal audit (similar to that of Stock Brokers & Clearing Members by CA’s) to be undertaken in the following manner:
a. It shall be conducted on a half yearly basis.
b. It shall be conducted by Chartered Accountants, Company Secretaries (PCS) or Cost and Management Accountants who are in practice and who do not have any conflict of interest with the CRA.
c. It shall cover all aspects of CRA operations and procedures, including investor grievance redressal mechanism, compliance with the requirements stipulated in the SEBI Act, Rules and Regulations made thereunder, and guidelines issued by SEBI from time to time.
d. The report shall state the methodology adopted, deficiencies observed, and consideration of response of the management on the deficiencies.
e. The report shall include a summary of operations and of the audit, covering the size of operations, number of transactions audited and the
number of instances where violations / deviations were observed while making observations on the compliance of any regulatory requirement.
f. The report shall comment on the adequacy of systems adopted by the CRA for compliance with the requirements of regulations and guidelines issued by SEBI and investor grievance redressal.
The time schedule for the internal audit shall be as under:
a. The CRA shall receive the report of the internal audit within 2 months from the end of the half-year.
b. The Board of Directors of the CRA shall consider the report and take steps to rectify the deficiencies, if any, and the CRA shall send an Action Taken Report (ATR) to SEBI within next 2 months.
It is clarified that for the half-year October 2009 - March 2010, the CRA shall receive the report of the internal audit by May 31, 2010. Its Board of Directors shall consider the report and take appropriate measures to rectify the deficiencies and the CRA shall send the Action Taken Report to SEBI by July 31, 2010.
Draft Master Press Note with FDI Regulatory Framework
The Legal basis: Foreign Direct Investments (FDI) by non-resident (NRI) in resident entities through transfer or issue of security to person resident outside India (PROI) is a ‘Capital account transaction’ and Government of India and Reserve bank of India (RBI) regulate this under the FEMA 1999 and its various regulations. Keeping in view the current requirements, the Government comes up from time to time with new regulation, amends/changes in existing one through order/allied rules, Press Notes, etc. . The regulatory framework over a period of time thus consists of Acts, Regulations, Press Notes, Press Releases, Clarifications, etc.
This draft Press Note consolidates into one document all the prior regulations on FDI and reflects the current ‘regulatory framework’ on FDI. It is clarified that this is a consolidation/compilation and comprehensive listing of most matters on FDI and is not intended to make changes in the extant regulations. While attempt has been made to deal with the subject comprehensively, if some aspect(s) has been left out then that will continue to be dealt in the current way where it is listed.
It is the intent and objective of the Government to have a regulatory framework which is transparent, predictable, understandable, simple and clear to reduce the regulatory burden and promote foreign direct investment. The new system of continuous consolidation and updation is primarily evinced as a measure of investor and investment friendliness.
This Press Note will have a sunset clause of 6 months and will automatically lapse on 30th September, 2010. A new press Note on Regulatory Framework would be issued every six months which will incorporate and reflect all the changes in the regulations during the last intervening period of 6 months. Thus the Government will issue Press Note on FDI Regulatory Framework twice a year in April and October which would be the current regulatory framework on that date.
All earlier Press Notes on FDI issued by Department of Industrial Policy and Promotion (DIPP), Government of India stand rescinded.
Notwithstanding the rescindment of earlier Press Notes, anything done or any action taken or purported to have been done or taken under the resinded Press Notes shall in so far as it is not inconsistent with this Press Note be deemed to have been done or taken under the corresponding provisions of this Press Note.
Press Note 7 of 2009 vide D/o IPP F.No. 12(58)/2005-FC dated 26.09.2009
Difficulties have been brought to the notice of the government in complying with the provisions of the earlier Press Notes within the stipulated time frame by Commodity Exchanges in India. The Government, on consideration and in order to facilitate the existing Commodity Exchanges to comply with the guidelines notified vide Press Note 2 (2008), has now decided to allow a further transition / complying/correction time to the existing Commodity exchange(s) beyond 30.09.2009. Accordingly, all such Commodity Exchanges are hereby advised to adhere to the conditions of Press Note 2 (2008) by 31.03.2010. This would comprise the last opportunity for such compliance.
All Commodity Exchanges shall furnish a status report informing the foreign investment in the Commodity Exchange as on 30.09.2009, along with details of equity structure, as well as the steps already taken/proposed to be taken with regard to compliance with the guidelines notified vide Press Note 2(2008), to the Department of Industrial Policy & Promotion (DIPP), Department of Consumer Affairs, Foreign Investment Promotion Board (FIPB), the Forward Market Commission (FMC) and SEBI.
Press Note 8 of 2009 as notified by 0/0 IPP F. No. 5(6)/2008-FC dated 16.12.2009
The existing policy of Government of India on the payment of royalties under Foreign Technology Collaboration provides for automatic approval for foreign technology transfers involving payment of lumpsum fee of US$ 2 million and payment of royalty of 5% on domestic sales and 8% on exports. In addition, where there is no technology transfer involved, royalty up to 2% for exports and 1% for domestic sales is allowed under automatic route on use of trademarks and brand names of the foreign collaborator. Separate norms are available for the hotel sector vide Press Note 18 (1991 Series) and Press Note 1 (1995 Series). Technology transfers involving payments above these limits required prior permission of the Government of India (Project Approval Board, Department of Industrial Policy and Promotion).
The Government of India has reviewed the extant policy and it has been decided to permit, with immediate effect, payments for royalty, lumpsum fee for transfer of technology and payments for use of trademark/brand name on the automatic route i.e. without any approval of the Government of India. All such payments will be subject to Foreign Exchange Management (Current Account Transactions) Rules, 2000 as amended from time to time.
Meaning, Payment of Royalty and Lumpsum fees is fully liberalised now without any ceiling limits and will fall under Automatic Route.
SEBI / IMD / MC No.1 /189241/ 2010 dated 1st January, 2010
To All Mutual Funds, Asset Management Companies (AMCs)
and Association of Mutual Funds in India (AMFI)
Sub: Master Circular for Mutual Funds
For effective regulation of the Mutual Fund Industry, Securities & Exchange Board of India (SEBI) has been issuing various circulars from time to time. In order to enable the industry and other users to have an access to all the applicable circulars at one place, Master Circular for Mutual Funds has been prepared. This Master Circular is a compilation of all the circulars issued by SEBI on the above subject, which are operational as on date of this circular.
1. This Master Circular includes circulars issued upto December 31, 2009.
2. In case of any inconsistency between the master circular and the applicable circulars, the contents of the relevant circular shall prevail.
3. Master Circular is a compilation of all the existing/applicable circulars issued by Investment Management Department of SEBI issued to Mutual Funds. Efforts have been made to incorporate certain applicable provisions of existing circulars (as on December 31, 2009) issued by other Department/Division of SEBI relevant to Mutual Funds.
The said Master Circular is divided under the following heads:
ABBREVIATIONS............................................................................. 5
CHAPTER 1..................................................................................... 6
OFFER DOCUMENT FOR SCHEMES ................................................. 6
CHAPTER 2................................................................................... 16
CONVERSION AND CONSOLIDATION OF SCHEMES AND LAUNCH OF
ADDITIONAL PLAN........................................................................ 16
CHAPTER 3................................................................................... 21
NEW PRODUCTS ........................................................................... 21
CHAPTER 4………………………………………………………………………….24
RISK MANAGEMENT SYSTEM........................................................ 24
CHAPTER 5................................................................................... 27
DISCLOSURES & REPORTING NORMS ........................................... 27
CHAPTER 6................................................................................... 35
GOVERNANCE NORMS .................................................................. 35
CHAPTER 7................................................................................... 55
SECONDARY MARKET ISSUES ...................................................... 55
CHAPTER 8................................................................................... 59
NET ASSET VALUE........................................................................ 59
CHAPTER 9................................................................................... 68
VALUATION .................................................................................. 68
CHAPTER 10................................................................................. 89
LOADS, FEES AND EXPENSES ....................................................... 89
CHAPTER 11................................................................................. 94
DIVIDEND DISTRIBUTION PROCEDURE ....................................... 94
CHAPTER 12................................................................................. 96
INVESTMENT BY SCHEMES........................................................... 96
CHAPTER 13................................................................................110
ADVERTISEMENTS ......................................................................110
CHAPTER 14................................................................................126
INVESTOR RIGHTS & OBLIGATIONS............................................126
CHAPTER 15................................................................................133
CERTIFICATION AND REGISTRATION OF INTERMEDIARIES .......133
CHAPTER 16................................................................................135
TRANSACTION IN MUTUAL FUNDS UNITS .....................................135
Formats & Annexures are given as attachments.
