How to find whether your Investors Complaints are received by Mutual Fund - AMFI website link

Disclosure of investor complaints with respect to Mutual Funds
SEBI has received feedback from investors and Investors’ Associations to improve transparency in the ‘grievance redressal mechanism’. Based on the same, transparency in ‘grievance redressal’ is identified as a key area to augment investor protection. It is envisaged that transparency will also improve the general functioning of the market by providing investors the wherewithal to make an informed choice.

Accordingly, it has been decided that Mutual Funds shall henceforth disclose on

• their websites,
• on the AMFI website
• as well as in their Annual Reports,

the details of investor complaints received by them from all sources. The said details should be vetted and signed off by the Trustees of the concerned Mutual Fund.

The format for the aforesaid disclosure is given as Annexure to this Circular Cir / IMD / DF / 2 / 2010 dated 13th May 2010.

AMFI Website Link to view Details of Investors Complaints received by Mutual Fund

Change of status or constitution or control of Credit Rating Agency requires prior approval of SEBI - CRA amendment 2010

CIR/MIRSD/CRA/7/2010 dated 13th May 2010 read with Gazette Notification No. LAD-NRO/GN/2009-2010/30/199044 dated 19th March 2010 and issue of SEBI (CREDIT RATING AGENCIES) (AMENDMENT) REGULATIONS, 2010

In the Securities and Exchange Board of India (Credit Rating Agencies) Regulation, 1999: -
(i) in regulation 2, in sub-regulation (1), after clause (e), the following clauses shall be inserted, namely:-
‘(ei) “change of status or constitution” in relation to a credit rating agency -
(i) means any change in its status or constitution of whatsoever nature; and
(ii) without prejudice to generality of sub-clause (i), includes—
(A) amalgamation, demerger, consolidation or any other kind of corporate
restructuring falling within the scope of section 391 of the Companies Act,
1956 (1 of 1956) or the corresponding provision of any other law for the
time being in force;
(B) change in its managing director or whole-time director; and
(C) any change in control over the body corporate;
(eii)“change in control”, in relation to a credit rating agency being a body
corporate, means:—
(i) if its shares are listed on any recognised stock exchange, change in control
as defined under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997;
(ii) in any other case, change in the controlling interest in the body corporate.
Explanation: For the purpose of sub-clause (ii), the expression “controlling interest” means an interest, whether direct or indirect, to the extent of at least 51% of voting rights in the body corporate;’

In regulation 9, in sub-regulation (1), after clause (b), the following clause shall be inserted, namely:-
“(c) where the credit rating agency proposes to change its status or constitution, it shall obtain prior approval of SEBI for continuing to act as such after the change.”

Declaration & Undertakings regarding PCC, MCV or equivalent structure by FIIs to be submitted within 30th September 2010

Sub: Additional information regarding PCC, MCV or equivalent structure by FIIs.
In order to ascertain the constitution of Foreign Institutional Investors (FII)
and Sub Accounts (SA), it has been decided to gather additional information pertaining to their structure.

In view of the above, all applications submitted for registration w.e.f April
07, 2010 shall be accompanied by the following declarations and undertakings on the letter head of respective FII, duly signed by its authorised signatory on behalf of itself and all its Sub Accounts.
Declarations
The applicants are required to provide the following declarations on its letter
head (Please tick whichever applicable).
(a) The applicant declares that it is not a Protected Cell Company (PCC) or
Segregated Portfolio Company (SPC) and does not have an equivalent
structure by whatever nomenclature.
(b) The applicant declares that it is not a Multi Class Share Vehicle (MCV) by
constitution and does not have an equivalent structure by whatever
nomenclature. It contains only single class of share.
(c) The applicant declares that it is a MCV by constitution and has more than
one class of shares or has an equivalent structure and that a common
portfolio is maintained for all classes of shares and satisfies broad based
criteria.
OR
(c) A segregated portfolio is maintained for separate classes of shares
wherein each such class of shares are in turn broad based.
Undertakings
In case the applicant is/ proposed to be a MCV or an equivalent structure and have more than one class of shares, it shall undertake the following on its letter head:
(a) Common portfolios shall be allocated across various share classes and it
shall be broad based;
OR
(a) If portfolios are segregated for each distinct share class, then each such
share class shall satisfy the broad based criteria;
(b) In case of change in structure/ constitution/ addition of classes of shares,
prior approval of SEBI shall be taken;
(c) In case of any addition of share classes, it shall follow the criteria at (a)
above.

All the existing Foreign Institutional Investors and Sub Accounts who are already registered as on April 07, 2010, shall provide the abovementioned declarations and undertakings on or before September 30, 2010.

The custodians are requested to bring the contents of this circular to the notice of their respective FII clients for compliance with the timelines indicated herein.

Source: CIR/IMD/FIIC/1/ 2010 dated 15th April 2010

Three principles for identification of deprived persons, amount and the method of reallocation in SEBI's disgorgement process - Justice Wadhwa Committee

SEBI’s Disbursement Process of Disgorged Amount in IPO

It is with regard to the disbursement of reallocation amount to investors from the amount disgorged in the matter of IPO irregularities. 

Justice Wadhwa committee submitted its report to SEBI while concluding that reallocation in terms of shares will not be practical it enunciated three principles for identification of deprived persons, amount and the method of reallocation, as under: (Source: PR No.93/2010)

I. Quantification of the amount of unjust enrichment: The gains associated with the number of shares allotted to applicants who had illegally cornered shares in the IPOs shall be treated as unjust allotments / enrichment.

II. Identification of “deprived” applicants: The totally unsuccessful applicants shall have a call on the reallocation. These applicants will be considered for the amount which is the difference of closing price of shares on the first day of listing / trading at NSE and the IPO issue price.

III. Basis for re-allocation amongst deprived applicants: The totally unsuccessful applicants shall be reallocated money value as computed above from recovered unjust gains, till they each receive the gains associated with minimum shares allotted to the lowest category in the IPO.

 

Disgorgement

It is well established worldwide that the power to disgorge is an equitable remedy and is not a penal or even a quasi-penal action. Thus it differs from actions like forfeiture and impounding of assets or money. Unlike damages, it is a method of forcing a defendant to give up the amount by which he or she was unjustly enriched. Disgorgement is intended not to impose on defendants any demand not already imposed by law, but only to deprive them of the fruit of their illegal behavior. It is designed to undo what could have been prevented had the defendants not outdistanced the investors in their unlawful project. In short, disgorgement merely discontinues an illegal arrangement and restores the status quo ante (See 1986 (160) ITR 969). Disgorgement is a useful equitable remedy because it strips the perpetrator of the fruits of his unlawful activity and returns him to the position he was in before he broke the law. The order of disgorgement would not prejudice the right of the regulator to take such further administrative, civil and criminal action as the facts of the case may warrant.

Disgorgement amount = No. of shares allotted to specified persons X (closing price on the date of listing – allotment price in IPO)

SEBI’s Power to Issue directions for disgorgement of ill-gotten gains

In the matter of construction of enabling statutes, the principle applicable is that if the Legislature enables something to be done, it gives power at the same time, by necessary implication, to do everything which is indispensable for the purpose of carrying out the purpose in view (see Craies on Statutes, 7th edn., p. 258). It has been held that the power to make a law with respect to any subject carries with it all the ancillary and incidental powers to make the law effective and workable and to prevent evasion (see Sodhi Transport Co. v. State of UP 1986 (1) SCR 939 at pp. 947-48 : AIR 1986 SC 1099)

In the case of ITO v. Mohammed Kunhi AIR 1969 SC 430, it has been observed as under:

".... It is a firmly established rule that an express grant of statutory power carried with it by necessary implication the authority to use all reasonable means to make such grant effective.

***

Therefore, in our view, the express grant of statutory power conferred by section 11B carries the authority to use of reasonable means to make such power effective."

Closing/shifting your Demat account, get refund of AMC collected upfront on annual/half yearly basis by Depository Partcipant (DP) now

Account Maintenance Charges collected upfront on annual/ half
yearly basis on demat accounts
The Depository Participants (DPs) have a system of collecting account maintenance charge (AMC) from beneficial owners (BOs) towards maintenance of demat accounts for varied periodicity of collection (viz. monthly, quarterly, half yearly and annually). It has been noticed that in cases where AMC is collected on an annual upfront basis, on closure/shifting of demat account, the AMC for the balance period for which no service has been provided by the DP, is not refunded to the BO.

In view of the above, it has been decided that in the event of closing of the demat account or shifting of the demat account from one DP to another, the AMC collected upfront on annual/half yearly basis by the DP, shall be refunded by the DP to the BO for the balance of the quarter/s. For instance, in case annual AMC has been paid by the BO and if the BO closes/shifts his account in the first quarter, he shall be refunded the amount of the balance 3 quarters i.e. 3/4th of the AMC. Likewise, if a BO closes/shifts his account in the third quarter, he shall be refunded the amount for the balance one quarter i.e. 1/4th of the AMC.

For the purpose of the above requirement the year shall begin from the date
of opening of the account in quarterly rests.

The above requirements shall be applicable to all existing and new accounts held with DPs which collect annual/half yearly upfront AMC. It is hereby clarified that the above requirements shall not be applicable to those DPs who collect quarterly/ monthly AMC.

Source: CIR/MRD/DP/ 20 /2010 dated 1st July 2010

Weekly reporting by FII (lending) on every friday, to be made available to public every tuesday - Website link & email id

Reporting of Lending of securities bought in the Indian Market
1. Please refer to Circular No. IMD/FII&C/32/2008 dated October 16, 2008 read with Circular No. IMD/FII&C/34/2008 dated October 20, 2008 related to reporting of information pertaining to securities lent by the FIIs to entities abroad.

Based on these reports, FIIs have been submitting daily reports based on which disclosures have been made available for public dissemination at http://203.199.12.51/SecuritiesLentMain.html twice in a week, one on Tuesday and another on Friday.

On a review it has been decided to modify the periodicity of these reports from daily submissions to weekly submissions. In accordance with this change in periodicity of reports, the FIIs shall now be required to submit the reports every Friday.

The public dissemination has also accordingly been changed to once a week – i.e. every Tuesday.

In view of the change in the periodicity of the reporting, PN issuing FIIs would be required to submit the following undertaking along with the weekly report: “Any fresh short position shall be immediately reported to SEBI”.

This information is required to be submitted by the FIIs to SEBI only to the dedicated e-mail idodireporting@sebi.gov.in.

Source: Cir No.IMD/FII&C/ 4 /2010 dated 29th June 2010

What exam for approved users & sales personnel of trading members in currency derivatives segment and trading in interest rate derivatives, register for NISM now

Notification No. LAD-NRO/GN/2010-11/12/10230 dated 29th June 2010 under regulation 3 of the Securities and Exchange Board of India (Certification of Associated Persons in the Securities Markets) Regulations, 2007
WHEREAS the National Institute of Securities Markets (hereinafter referred to as NISM) has issued a communiqué no. NISM/Certification/Series-IV:IRD/2010/1 dated May 18, 2010, on “NISM-Series-IV: Interest Rate Derivatives Certification Examination” (hereinafter referred to as ‘the Series-IV: IRD’) for approved users and sales personnel of the trading members who are registered as such in the currency derivatives segment of a recognized stock exchange and trading in interest rate derivatives.

NOW THEREFORE the Securities and Exchange Board of India approves the Series-IV: IRD, as issued by NISM vide aforesaid communiqué, as the required certification for approved users and sales personnel of the abovementioned trading member for the purpose of sub-regulation (2) of regulation 16L of the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 read with Circular No. SEBI/DNPD/Cir-46/2009 dated August 28, 2009.

NOW THEREFORE such trading member shall ensure that all its existing approved users and sales personnel obtain Series-IV: IRD certification within 2 years from the date of this notification.

FURTHER such trading member shall ensure that every approved user and sales personnel employed by it after the date of this notification, obtains Series-IV: IRD certification within 1 year from the date of employment.

Registration:

• Register through NSE
• Register through BSE
• Register through MCX-SX

What exam for distributors, agents or any persons employed or engaged or to be employed or engaged in the sale and/or distribution of mutual fund products by SEBI NISM?

Cir / IMD / DF / 5 / 2010 June 24 , 2010
All Mutual Funds, Asset Management Companies (AMCs)

Sub: Certification Programme for sale and/ or distribution of mutual fund products
In terms of SEBI Circulars dated September 25, 2001, November 28, 2002, April 03, 2003 and February 04, 2004 about, inter alia, the captioned subject, agents/distributors of mutual fund units were required to obtain certification from the Association of Mutual Funds in India (AMFI) by passing a certification examination, and to obtain registration with AMFI.

In terms of SEBI notification No. LAD-NRO/GN/2010-11/09/6422 dated May 31, 2010, under regulation 3 (1) of the (Certification of Associated Persons in the Securities Markets) Regulations, 2007, (Certification Regulations) it has been decided that from June 01, 2010, the certification examination for distributors, agents or any other persons employed or engaged or to be employed or engaged in the sale and/or distribution of mutual fund products, would be conducted by the National Institute of Securities Markets (NISM).  Accordingly, it was notified that with effect from June 01, 2010, the following category of associated persons, i.e., distributors, agents or any persons employed or engaged or to be employed or engaged in the sale and/or distribution of mutual fund products, shall be required to have a valid certification from the National Institute of Securities Markets (NISM) by passing the certification examination as mentioned in the NISM communiqué NISM/Certification/Series-V-A: MFD/2010/01 dated May 05, 2010.
Provided that if the said associated person possesses a valid certificate by passing before June 01, 2010, the AMFI Mutual Fund (Advisors) Module, he shall be exempted from the requirement of the aforementioned NISM certification examination.

Under the existing instructions, the agent/ distributor was exempted from the AMFI certification examination if he had completed 50 years of age and had at least 5 years of experience in distribution of mutual fund units. As per regulation 4 (3) of the Certification Regulations, persons who have attained the age of fifty years or who have at least ten years experience in the securities markets in the sale and/ or distribution of mutual fund products as on May 31, 2010, will be given the option of obtaining the certification either by passing the NISM certification examination or qualifying for Continuing Professional Education (CPE) by obtaining such classroom credits as may be specified by NISM from time to time.

The Certification Regulations require the persons referred to in para 2 above to comply with the requirements for CPE as specified by NISM within the validity period of the certificate obtained by passing the certification examination.
However, to facilitate the transition process from AMFI to NISM, it has been decided that a person holding a valid AMFI certification whose validity expires between June 01, 2010 and December 31, 2010, would be required to comply with the CPE requirements as laid down by NISM under the relevant clauses of the Certification Regulations, by December 31, 2010.

An associated person holding a valid AMFI/NISM certification whose validity
expires anytime after December 31, 2010, would be required to comply with the CPE requirements as laid down by NISM under the relevant clauses of the Certification Regulations, prior to the expiry of the validity of the certification.

NSE website link of QIP offer documents with shareholding pattern as filed under Clause 35 format

Sub: Disclosure of details of the allottees in the Qualified Institutional Placements (QIP) made by issuer company

SEBI has decided that the details of allottees and the corresponding pre and post QIP issue shareholding in the issuer company may be disclosed on the website of the stock exchanges. Accordingly, this circular is issued in exercise of powers conferred by sub-section (1) of Section 11 of the Securities and Exchange Board of India Act, 1992, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.   Ensure that the details of those allottes in QIP who have been allotted more than 5% of the securities offered in the QIP, viz names of the allottees and number of securities allotted to each of them, pre and post issue shareholding pattern of the issuer in the format specified in clause 35 of the Equity Listing Agreement shall be made available on the website of stock exchanges along with the final placement document.

Source: SEBI/CFD/DIL/LA/1/2010/05/03 dated 5th March 2010

Hence, the new disclosures can be found at

http://www.nseindia.com/content/equities/jp_qipfinal_new.htm

Issue of Debt Securities now has Non-Convertible Debentures (Reserve Bank) Directions, 2010 in addition to compliance under Companies Act & SEBI regulation

Reporting of Issuance of Non Convertible Debentures

The Reserve Bank of India has issued the ‘Issuance of Non-Convertible Debentures (Reserve Bank) Directions, 2010’ vide IDMD.DOD.9/11.01.01(A)/2009-10 dated June 23, 2010 (which is made effective from 2nd August 2010) regarding regulation of non-convertible debentures of maturity up to one year (NCDs). In terms of paragraph 12.7 of the said Directions read with paragraphs 12.4, 12.5 and 12.6 ibid, the Debenture Trustees are required to report the details of issuance of the NCDs, the outstanding amount of NCDs and default in repayment of NCDs to the Financial Markets Department, Reserve Bank of India, Central Office, Mumbai 400 001.

It is advised to submit the required information as per format enclosed in

1. Annex 1 (details of issuance of NCDs),
2. Annex 2 (outstanding amount of NCDs), and
3. Annex 3 (particulars of default in repayment of NCDs) to the Chief General Manager, Financial Markets Department, Reserve Bank of India, Central Office, Fort Mumbai 400 001 (Fax: 022-22630981/22634824; e-mail).
4. The required information may be submitted in hard as well as soft copies.
5. While the report on issuance of NCDs may be submitted within 3 days from the date of completion of the issue and
6. the report on default in repayment may be submitted immediately,
7. the report on outstanding amount of NCDs may be submitted on quarterly basis within five working days from the completion of the calendar quarter to which the report pertains.

Issuance of Non-Convertible Debentures (Reserve Bank) Directions, 2010 – An Understanding:

The Reserve Bank of India, having considered it necessary in public interest and to regulate the financial system of the country to its advantage, in exercise of its powers conferred under sections 45K, 45L and  45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, hereby gives to the agencies dealing in securities and money market instruments, the following directions for issuance of Non-Convertible Debentures (NCDs) of original or initial maturity up to one year.

Definition: Non-Convertible Debenture (NCD) means a debt instrument issued by a corporate (including NBFCs) with original or initial maturity up to one year and issued by way of private placement;

“Corporate” means a company as defined in the Companies Act, 1956 (including NBFCs) and a corporation established by an act of any Legislature.

Eligibility to issue NCDs
A corporate shall be eligible to issue NCDs if it fulfills the following criteria, namely,

1. the corporate has a tangible net worth of not less than Rs.4 crore, as per the latest audited balance sheet;
2. the corporate has been sanctioned working capital limit or term loan by bank/s or all-India financial institution/s; and
   
3. the borrowal account of the corporate is classified as a Standard Asset by the financing bank/s or institution/s.

Rating Requirement
An eligible corporate intending to issue NCDs shall obtain credit rating for issuance of the NCDs from one of the rating agencies, viz., the Credit Rating Information Services of India Ltd. (CRISIL) or the Investment Information and Credit Rating Agency of India Ltd. (ICRA) or the Credit Analysis and Research Ltd. (CARE) or the FITCH Ratings India Pvt. Ltd or such other agencies registered with Securities and Exchange Board of India (SEBI) or such other credit rating agencies as may be specified by the Reserve Bank of India from time to time, for the purpose.
The minimum credit rating shall be P-2 of CRISIL or such equivalent rating by other agencies.

The Corporate shall ensure at the time of issuance of NCDs that the rating so obtained is current and has not fallen due for review.

Maturity

• NCDs shall be issued for maturities of 90 days or more from the date of issue.
• The exercise date of option (put/call), if any, attached to the NCDs shall fall after the period of 90 days from the date of issue.
• The tenor of the NCDs shall not exceed the validity period of the credit rating of the instrument.

Denomination
NCDs may be issued in denominations with a minimum of Rs.5 lakh (face value) and in multiples of Rs.1 lakh.

Limits and the Amount of Issue of NCDs

1. The aggregate amount of NCDs issued by a corporate shall be within such limit as may be approved by the Board of Directors of the corporate or the quantum indicated by the Credit Rating Agency for the rating granted, whichever is lower.
2. The total amount of NCDs proposed to be issued shall be completed within a period of 2 weeks from the date on which the corporate opens the issue for subscription.

Procedure for Issuance

1. The corporate shall disclose to the prospective investors, its financial position as per the standard market practice.
2. The auditors of the corporate shall certify to the investors that all the eligibility conditions set forth in these directions for the issue of NCDs are met by the corporate.
3. The requirements of all the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, or any other law, that may be applicable, shall be complied with by the corporate and shall also comply with Debt Listing Agreement.
4. The Debenture Certificate shall be issued within the period prescribed in the Companies Act, 1956 or any other law as in force at the time of issuance. 
5. NCDs may be issued at face value carrying a coupon rate or at a discount to face value as zero coupon instruments as determined by the corporate.

Debenture Trustee

• Every corporate issuing NCDs shall appoint a Debenture Trustee (DT) for each issuance of the NCDs.
• Any entity that is registered as a DT with the SEBI under SEBI (Debenture Trustees) Regulations, 1993, shall be eligible to act as DT for issue of the NCDs only subject to compliance with the requirement of these Directions.
• The DT shall submit to the Reserve Bank of India such information as required by it from time to time.

Investment in NCD
NCDs may be issued to and held by individuals, banks, Primary Dealers (PDs), other corporate bodies including insurance companies and mutual funds registered or incorporated in India and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs).

• Investments in NCDs by Banks/PDs shall be subject to the approval of the respective regulators.
• Investments by the FIIs shall be within such limits as may be set forth in this regard from time to time by the SEBI.

Preference for Dematerialisation

While option is available to both issuers and subscribers to issue/hold NCDs in dematerialised or physical form, they are encouraged to issue/ hold NCDs in dematerialised form. However, banks, FIs and PDs are required to make fresh investments in NCDs only in dematerialised form.

Roles and Responsibilities

12.1 The role and responsibilities of corporates, DTs and the credit rating agencies (CRAs) are set out below:

(a) Corporates
12.2 Corporates shall ensure that the guidelines and procedures laid down for issuance of NCD are strictly adhered to.
(b) Debenture Trustees
12.3 The roles, responsibilities, duties and functions of the DTs shall be guided by these regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations,1993, the trust deed and offer document.
12.4 The DTs shall report, within three days from the date of completion of the issue, the issuance details to the Chief General Manager, Financial Markets Department, Reserve Bank of India, Central Office, Fort, Mumbai-400001.
12.5 DTs should submit to the Reserve Bank of India (on a quarterly basis) a report on the outstanding amount of NCDs of maturity up to year.
12.6 In order to monitor defaults in redemption of NCDs, the DTs are advised to report immediately, on occurrence, full particulars of defaults in repayment of NCDs to the Financial Markets Department, Reserve Bank of India, Central Office, Fort, Mumbai-400001, Fax: 022-22630981/22634824.
12.7 The DTs shall report the information called for under para 12.4, 12.5 and 12.6 of these Directions as per the format notified by the Reserve Bank of India, Financial Markets Department, Central Office, Mumbai from time to time.
(c) Credit Rating Agencies (CRAs)
12.8 Code of Conduct prescribed by the SEBI for the CRAs for undertaking rating of capital market instruments shall be applicable to them (CRAs) for rating the NCDs.
12.9 The CRA shall have the discretion to determine the validity period of the rating depending upon its perception about the strength of the issuer. Accordingly, CRA shall, at the time of rating, clearly indicate the date when the rating is due for review.

12.10 While the CRAs may decide the validity period of credit rating, they shall closely monitor the rating assigned to corporates vis-à-vis their track record at regular intervals and make their revision in the ratings public through their publications and website.

Documentary Procedure

1. Issuers of NCDs of maturity up to one year shall follow the Disclosure Document brought out by the Fixed Income Money Market and Derivatives Association of India (FIMMDA), in consultation with the Reserve Bank of India as amended from time to time.
2. Violation of the directions will attract penalties, which would include debarring of the entity from the NCD market.

Overriding Clarification on Classification of Manufacture & Service Industries under Micro Small Medium Enterprises Act issued by MSME Ministry

Categorisation of activities under manufacture or service under the MSMED Act, 2006

This always remained as a moot point, while categorising under MSMED Act, which provides different limits (link) for manufacturing and servicing industries.

Now, the Ministry of Micro, Small & Medium Enterprises has given a CLARIFICATION in supersession of all other circulars that:

A)    Activities considered as manufacturing :

1. (i)                  Medical Equipment and Ayurvedic Product
2. (ii)                Composite unit of Bacon Processing and Piggery Farm (Piggary Farm without bacon processing shall not be classified either as manufacturing or as service enterprise because this is farming activity)
3. (iii)               Tobacco Processing
4. (iv)              Beedi/ Cigarette manufacturing and other tobacco products
5. (v)                Extraction of Agave Spirit from Agave juice (imported medicinal plant) extraction of Agave
6. (vi)              Manufacture of Bio-fertilizer

B)     Activities considered as Service :

1. (i)                  Sanitation Services (Hiring of Septic Tank Cleaner)
2. (ii)                Clinical Pathological Laboratories and scanning, MRI Tests
3. (iii)               Hospitals
4. (iv)              Agri – clinic and Agri – Business
5. (v)                Restaurants with Bar
6. (vi)              Canteens
7. (vii)             Motel industry

The activity “Bee Keeping” is a farming allied activity and therefore, would not be covered in either manufacturing or service activity.

Source: No.5(6)/2/2009-MSME POL dated 21/07/2009

As you know [MSMED]Small Scale Industry definition only under MSMED Act for IDRA too.

To understand all the notifications of industry, read Industries DIPP updates

Violated Foreign Exchange laws: on becoming aware of the contravention, disclose it to RBI to save huge penalty of 2 lakhs or 3 times the amount involved in transaction [Compounding Master Circular]

It has been decided to put in place an updated procedure for compounding of contravention/s under FEMA on the basis of observations made over the last few years on the compounding process on a continuous basis and the experience gained in dealing with compounding applications. The objective is rationalization and streamlining of the process and the procedure for compounding and to enhance transparency and effect smooth implementation of the compounding process. The directions contained in the compounding of contravention/s issued vide A.P. (DIR Series) Circular No.31 dated February 1, 2005 are superseded by this circular vide A.P. (DIR Series) Circular No. 56 dated 28th June 2010 and as provided in Master Circular on Compounding of Contraventions under FEMA, 1999 read with Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules).  Further, Operational checkpoints for submission of a compounding application and the related matters are also given.

 

When an application is made for compounding of a contravention, the RBI would examine the nature of contravention in the following manner:
• whether the contravention is technical and/or minor in nature and needs only an administrative cautionary advice;
• whether the contravention is serious and warrants compounding of the contravention; and
• whether the contravention, prima facie, involves money-laundering, national and security concerns involving serious infringements of the regulatory framework. In such a case, RBI may order necessary investigation.

Investigation by Enforcement Directorate (ED)
If RBI finds that it is necessary for further investigation, it may recommend the matter to the Directorate of Enforcement (DoE) for further investigation. Such action may be initiated under FEMA, 1999 by the Enforcement Directorate or the Anti Money Laundering Authority instituted under the Prevention of Money Laundering Act, 2002 or to any other agencies, as RBI may deem fit.

Time Frame for Disposing of Compounding Application
RBI states that applications for compounding will be disposed of in 180 days. If investigation as aforesaid is necessary, compounding will not take place. The application will be returned to the Applicant.

Factors Considered for determining the compounding fee
• The amount of gain or unfair advantage;
• The amount of loss caused to the exchequer;
• The economic benefits accruing to the contravener due to delayed compliance;
• The repetitive nature of contravention by the contravener;
• The conduct of contravener in disclosure of information; and
• Such other matter in the opinion of RBI will be the factors on the basis of which the application will be examined.

Time Frame for Payment of Compounding Fee
The amount payable by the contravener as per the compounding order should be paid within 15 days from the date of the order. If the contravener fails to pay the said amount then it will be deemed that the contravener has never applied for compounding of offence.

Repeated Offences <= 3years
A similar offence within 3 years of the compounding of the earlier offence shall not be compoundable.  Any second or subsequent contravention committed after the expiry of a period of three years from the date on which the contravention was previously compounded shall be deemed to be a first contravention.

Certificate after Compounding
RBI will issue a certificate to the contravener subject to the conditions of the compounding order after realization of the amount paid as per the compounding order.