Employees definition under Gratuity Act amended to included all types of works irrespective of salary limits

The Payment of Gratuity Act, 1972 definition of the term “employee” under Section 2 got widened.  It is no more the old definition of persons employed in administrative or managerial capacity.

 

The new definition is as follows,

Employees means any persons [NOT being an Apprentice] employed for wages in any kind of work (manual or otherwise) or in connection with work of factory, mine, plantation, oilfield, railway company, port or other establishment.

So, even teachers are eligible for gratuity now overriding the famous Ahmedabad Private Primary Teachers Association case.

Source: Payment of Gratuity (Amendment) Act, 2009

Revised ESI limit Rs.15000 (not Rs.10000) for employees/workers w.e.f 1st May 2010 - as amended by the Act [extended]

Ministry of Labour & Employment vide G.S.R. 394(E), dated 20th April, 2010 has made Employees State Insurance Act, 1948 read with ESI (Central) (Amendment) Rules, 2010 applicable to employees whose wages does not exceed Rs. 15,000/- (Fifteen Thousand Only).

 

The said notification shall come into effect from 1st May 2010.

Old SEBI circular on revised Trading hours in Stock Exchanges

Sub: Trading Hours on Stock Exchanges
In consultation with the Stock Exchanges and other market participants, it has been decided to permit the Stock Exchanges to set their trading hours (in the cash and derivatives segments) subject to the condition that

a. The trading hours are between 9 AM and 5 PM, and
b. The Exchange has in place risk management system and infrastructure
commensurate to the trading hours.

Source: SEBI/DNPD/Cir-47/2009 dated 23rd October 2009

SEBI master ciruclar on Stock Exchange, Depository, etc...updated as on 31st March 2010

SEBI Master Circulars on Stock Exchange/Depositories

Annexure 1 – Master Circular for Stock Exchange/ Cash Market – Trading Part- I. It contains the following,

SECTION – 1: BULK DEALS AND BLOCK DEALS ............................................... 5
1.1 Bulk Deal ............................................................................................................. 5
1.2 Block Deal ........................................................................................................... 5
SECTION – 2: CIRCUIT FILTER / PRICE BANDS ................................................. 7
2.1 Index based Market wide circuit filter ................................................................. 7
2.2 Scrip wise price bands ......................................................................................... 7
SECTION – 3 : IMPLEMENTATION OF UNIFORM SECURITY SPECIFIC
ACTION IN STOCK EXCHANGES........................................................................... 8
3.1 Uniform security specific measure ...................................................................... 8
SECTION – 4 : MARGIN TRADING.......................................................................... 9
4.1 Margin trading ..................................................................................................... 9
4.2 Securities eligible for margin trading .................................................................. 9
4.3 Eligibility requirements for brokers to provide margin trading facility to clients9
4.4 No-objection certificate .................................................................................. 10
4.5 Agreement.......................................................................................................... 10
4.6 Source of Funds for the broker for providing margin trading facility to his
clients and maximum permissible borrowing by any broker............................. 10
4.7 Margin requirements.......................................................................................... 11
4.8 Liquidation of securities by the broker in case of default by the client............. 11
4.9 Maintenance of Records .................................................................................... 12
4.10 Disclosure of exposure to the Margin Trading Facility ..................................... 12
4.11 Arbitration.......................................................................................................... 13
4.12 Usage of Investor Protection Fund and Trade/Settlement Guarantee Fund ...... 13
4.13 General provisions ............................................................................................. 13
SECTION – 5 : MARKET MAKER............................................................................ 15
5.1 Guidelines for Market Maker............................................................................. 15
5.1.1 Criterion for selection of scrips for Market Making.......................................... 16
5.1.2 Exclusivity of Market Makers ........................................................................... 16
5.1.3 Number of Market Makers for each share ......................................................... 17
5.1.4 Qualifications for a registered Market Maker.................................................... 17
5.1.5 The obligations and responsibilities of Market Makers..................................... 17
5.1.6 Rights of the Market Maker............................................................................... 18
5.1.7 Voluntary De-registration .................................................................................. 18
5.1.8 Compulsory De-registration............................................................................... 18
5.1.9 Dissemination of Information ............................................................................ 18
5.1.10 Number of Shares per Market Maker ................................................................ 18
5.1.11 Risk Containment Measures and monitoring for Market Makers ..................... 18
SECTION – 6: NEGOTIATED DEALS..................................................................... 20
6.1 Negotiated Deals................................................................................................ 20
SECTION – 7 : ODD LOT .......................................................................................... 21
7.1 Trading and Settlement of trades in dematerialised securities ................ 21
SECTION – 8: PERMANENT ACCOUNT NUMBER ........................................... 22
8.1 Mandatory PAN requirement for transaction in Cash Market........................... 22
8.2 PAN as a sole identification number for all transactions in the securities market
………………………………………………………………………………….22
8.3 Incase of Central and State Govt., and officials appointed by courts ................ 22
8.4. Exemptions for Investors in Sikkim .................................................................. 23
8.5 Incase of FIIs/Institutional Clients..................................................................... 23
8.6 Incase of UN entities and multilateral agencies which are exempted from paying
taxes/ filling tax returns in India ........................................................................ 23
8.7 Incase of HUF, Association of Persons (AoP), Partnership Firm, unregistered
Trust, Registered Trust, Corporate Bodies, minors, etc..................................... 24
8.8 Incase of Slight mismatch in PAN card details as well as difference in maiden
name and current name (predominantly in the case of married women) of the
investors.............................................................................................................24
8.9 Incase of NRI/PIOs ............................................................................................ 24
8.10 PAN requirement for transfer of shares in physical form.................................. 24
SECTION – 9: PROPRIETARY TRADING.............................................................. 26
9.1 Disclosure of Proprietary Trading by Broker to Client ..................................... 26

9.2 Pro-account Trading Terminal........................................................................... 26
SECTION – 10 : SHORT SELLING AND SECURITIES LENDING AND
BORROWING SCHEME............................................................................................ 28
10.1 Broad Framework for Short Selling and Securities Lending and Borrowing.... 28
10.2 Annexure 1 – Broad framework for short selling .............................................. 28
10.3 Annexure 2 - Broad framework for securities lending and borrowing .. 29
SECTION – 11: SPOT AND OFF-THE-FLOOR TRANSACTIONS..................... 34
SECTION – 12: SECURITIES TRANSACTION TAX............................................. 35
12.1 Implementation of Securities Transaction Tax .................................................. 35
SECTION – 13 : TIME STAMPING OF ORDERS................................................... 35
13.1 Time Stamping of Orders................................................................................... 35
SECTION – 14 : TRADING IN GOVERNMENT SECURITIES............................ 36
14.1 Government Securities....................................................................................... 36
SECTION – 15: UNIQUE CLIENT CODE............................................................... 37
SECTION - 16: TRANSACTION CHARGES BY THE STOCK EXCHANGES.. 38
SECTION 17 - PRESERVATION OF RECORDS .................................................... 39
SECTION 18 - DISCLOSURE OF INVESTOR COMPLAINTS AND
ARBITRATION DETAILS ON STOCK EXCHANGE WEBSITE......................... 40

Annexure 2 – Master Circular for Stock Exchange/ Cash Market – Trading Part- II

Annexure 3 – Master Circular for Stock Exchange/ Cash Market – Settlement

Annexure 4 – Master Circular for Stock Exchange/ Cash Market – Comprehensive Risk Management

Annexure 5 – Master Circular for Stock Exchange - Companies shifted from Trade for trade to Rolling Settlement

Annexure 6 – Master Circular on allotment of codes to Stock Exchanges, Subsidiary management by Stock Exchanges, Governance of recognised Stock Exchanges and Arbitration in recognised Stock Exchanges.

Annexure 7 - Master Circular for Depositories:

It contains the following,

Section-1 - Beneficial Owner (BO) Accounts
1.1 Opening of BO Account by non-body corporates
1.1.1 Proof of Identity (PoI)
1.1.2 Proof of Address (PoA)
1.2 Exemptions from and clarifications relating to mandatory requirement
of PAN
1.3 Fees/Charges to be paid by BO
1.4 Transfer of funds and securities from Clearing Member pool account to
BO Account
1.5 Printing of Grievances Redressal Mechanism on Delivery Instruction
Form Book
1.6 Exemption to Depository Participants (DPs) from providing hard
copies of transaction statements to BOs
1.7 Safeguards on transfer of securities in dematerialized mode
Section-2 - Issuer related
2.1 Charges to be paid by Issuers
2.2 Activation of International Securities Identification Number (ISIN) in
case of IPO
2.3 Registrar and Transfer Agents
2.4 Mandatory admission of debt instruments on both the Depositories
2.5 American Depository Receipts (ADRs)/Global Depository Receipts
(GDRs)
2.6 Electronic Clearing System (ECS) facility
2.6.1 Dividend Distribution
2.6.2 Refund in public/rights issues
Section-3 – Depositories/ Depository Participant (DP) Related
3.1 Designated e-mail ID for redressal of investor complaints
3.2 Approval of amendments to Bye Laws / Rules of Stock Exchanges and
Depositories
3.3 Preservation of Records
3.4 Foreign investments in infrastructure companies in securities markets
3.5 Activity schedule for depositories for T+2 rolling Settlement
3.6 Settlement of transactions in case of holidays
3.7 Supervision of branches of depository participants
3.8 Designated e-mail ID for regulatory communication with SEBI
3.9 Disclosure of investor complaints and arbitration details on Depository
website

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Professional Misconduct for CS,CA & CWA: Don't talk when your Client Drives (& viceversa) - if its true!!!

Many road safety campaigns targets the drivers and the passengers. But Bangalore Traffic police is different (Hats off)!!!

Believe, atleast if our Profession makes this as a Misconduct, everyone's Conduct will change! see Yes.

No Ministry of Commerce approval is required for Royalty/Lumpsum payment above 5%/8% - RBI Current Account Transaction Amendment

In continuation of Press Note 8 issued by DIPP with effect from 16.12. 2009 that No limits for royalty/lumpsum payment in FEMA under Current Account Transaction as per PN 8 – DIPP allowed it under Automatic route (ie) without the approval of RBI

The Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2010 is passed. They shall be deemed to have come into force with effect from the 16th day of December, 2009.

In terms of Rule 4 of the Foreign Exchange Management (Current Account Transactions) Rules 2000, prior approval of the Ministry of Commerce and Industry, Government of India, is required for drawing foreign exchange for remittances under technical collaboration agreements where payment of royalty exceeds 5% on local sales and 8% on exports and lump-sum payment exceeds USD 2 million [item 8 of Schedule II to the Foreign Exchange Management (Current Account Transactions) Rules, 2000]. The Government of India has reviewed the extant policy with regard to liberalization of foreign technology agreement and it was decided to omit item number 8 of Schedule II to the Foreign Exchange Management (Current Account Transaction) Rules, 2000, and the entry relating thereto.

Accordingly, AD Category-I banks may permit drawal of foreign exchange by persons for payment of royalty and lump-sum payment under technical collaboration agreements without the approval of Ministry of Commerce and Industry, Government of India.

The amendment to the Foreign Exchange Management (Current Account Transactions) Rules, 2000, in this regard has been notified by the Government of India vide Notification No.G.S.R.382 (E) dated May 5, 2010.

Source: RBI/2009-10/465 A. P. (DIR Series) Circular No. 52 dated 13th May 2010

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USD 3000 foreign visits abroad, USD 5000 to Iran/Iraq, Libya, Russia & Republics of Commonwealth of Independent States - RBI FEMA currency limits

Release of Foreign Exchange for Visits Abroad – Currency Component
Attention of Authorised Persons in foreign exchange is invited to A.P.(DIR Series) Circular No. 19 dated October 30, 2000 and A.P. (DIR Series) Circular No.11 [ A.P. ( F.L. Series ) Circular No.1 ] dated November 13, 2001, in terms of which Authorised Dealers and Full Fledged Money Changers are permitted to sell foreign exchange in the form of foreign currency notes and coins, up to USD 2,000 [increased to USD 3000] or its equivalent, to the travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States, without the prior permission from the Reserve Bank (RBI).

Authorised Dealers and Full Fledged Money Changers may, as hitherto, continue to sell foreign exchange in the form of foreign currency notes and coins up to USD 5,000 or its equivalent to the travellers proceeding to Iraq or Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States.

Source: RBI/2009-10/446 A.P. (DIR Series) Circular No. 50 May 4, 2010 A.P. (FL Series) Circular No. 7 dated 4th May 2010

NBFC requires RBI NoC for overseas direct investment (ODI) in Joint Ventures or wholly owned subsidiary (JV/WoS) abroad

Instances have been observed where Non Banking Finance Companies (NBFCs) have made overseas investments without regulatory clearance of the Department of Non-Banking Supervision, Reserve Bank of India. Any investments made by NBFCs without regulatory clearance is a violation of FEMA 2004 and attracts penal provisions.

In this regard, it is emphasised that all NBFCs desirous of making any overseas investment must obtain 'No Objection' (NoC) of the Department of Non-Banking Supervision (DNBS) of RBI before making such investment, from the Regional Office in whose jurisdiction the head office of the company is registered.

Applications in this regard shall clearly state the activities intended to be undertaken by the overseas entity. NBFCs may also note that in terms of the Regulations ibid, they are not permitted to make direct investment in a foreign entity engaged in activities not approved under FEMA.

Source: RBI/2009-10/442 DNBS (PD).CC. No.173/03.10.01 /2009-10 dated 3rd May 2010

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