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Corporate Updates 06 May 2014

May 6, 2014 Leave a Comment

SEBI: 

In order to maintain a single document in line with the Listing Agreement and to address the concerns of excessive delegation in the garb of flexibility with respect to certain areas, such as, disclosure requirements, SEBI has specified all the substantive requirements and enabling provisions of present Listing Agreements in the draft Listing Regulations known as “Securities and Exchange Board of India (Listing Obligations and Disclosures Requirement) Regulations, 2014. Comments on the draft regulations can be emailed on or before 30th May, 2014. To view and download the draft Regulations, please Click Here.

RBI: 

RBI vide its Circular No.127 has prescribed the revised Reporting mechanism for transfer of equity shares/ fully and mandatorily convertible preference shares/ fully and mandatorily convertible debentures for Foreign Direct Investment (FDI) in India. According to the new framework, the investee company would have to file form FC-TRS with the AD Category-I bank with in 60 days from the date of receipt of the amount of consideration. AD Category-I bank may approach Regional Office concerned of RBI to regularize the delay in submission of form FC-TRS, beyond the prescribed period of 60 days and in all other cases, form FC-TRS shall continue to be scrutinised at AD bank level as per extant practice.

Filed Under: News & Updates, RBI, SEBI

Corporate Updates 03 May 2014

May 3, 2014 Leave a Comment

Supreme Court Judgment: 

Whether an open offer voluntarily made through a Public Announcement for purchase of shares of the target company can be permitted to be withdrawn at a time when the voluntary open offer has become uneconomical to be performed ???

The Supreme Court has delivered the important judgment in Civil Appeal No. 6041 of 2013 in Securities and Exchange Board of India vs. M/s. Akshya Infrastructure Pvt. Ltd., settling the position regarding India Inc’s responsibility to open offers. A Supreme Court Bench while dealing with the fundamental issue that whether an open offer voluntarily made through a Public Announcement for purchase of shares of the target company can be permitted to be withdrawn at a time when the voluntary open offer has become uneconomical to be performed, has ruled that corporates will not be allowed to withdraw open offers on grounds that the offer has become uneconomical or lacks commercial reasonableness. The Apex Court further held that any delay by the market regulator SEBI in replying to open offer applications couldn’t be cited by corporates to back out of open offers.

Once an open offer is made through public announcement it can’t be withdrawn later if it becomes uneconomical.

FACTS:

(a) Akshya Infra is part of the promoter group of Marg Limited and had breached the 5% creeping acquisition limit in the target company Marg Limited in years 2006-07, 2007-08 and 2010-11. under regulation 11 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

(b) On 20th October 2011, Respondent company made a voluntary open offer wherein the public shareholders of Marg Limited were given an opportunity to exit at an offer price of rupees 91/share. But on 29th March 2012, Akshya Infra alleged groundless delay by SEBI in approving the draft letter of offer and sought to withdraw of Rs.17.46 Cr. from escrow account for the open offer.

The claim of the company was that the regulator’s delay had rendered the complete open offer exercise worthless and that the offer lacked economic reasoning and commercial reasonableness.

(c) After unjustified delay, SEBI by letter dated 30th November, 2012 conveyed its comments on draft letter of offer however; no reference was made regarding request for withdrawal of offer.

(d) The respondent challenged SEBI’s comment before SAT.

(e) The SAT however didn’t make any observation on merits of the issue. SEBI found that that allowing Akshya Infra to withdraw the public offer would be damaging to the overall interest of the shareholders.

(f) Aggrieved-appellant, filed the instant civil petition before the Supreme Court.

JUDGEMENT

(1) The respondent was required to comply with Regulation 11 and make a Public Announcement to acquire shares in accordance with law.

(2) Non receipt of timely information from respondent was not ground for the SEBI – appellant to delay issuance of comments on letter of offer.

(3) SEBI is the watchdog of the Securities Market, It is the guardian of the interest of the shareholders Therefore, SEBI ought not to act in a lackadaisical manner in the performance of its duties.

(4) Delay on part of SEBI would not result in nullifying the actions taken by it, even though belated.

(5) Permitting the respondent to withdraw the public offer would be detrimental to the overall interest of the shareholders. As it would defeat the very purpose of Take over code.

(6) There can be no distinction between a triggered public offer and a voluntary public offer both have to be considered on an equal footing.

(7) In view of above, the appeal is allowed. The impugned order passed by the SAT is set aside and the directions issued by the appellant in the letter dated 30th November, 2012 are restored.

Filed Under: Court Judgment, SEBI

Corporate Updates 30 April 2014

April 30, 2014 Leave a Comment

TDS: 

Centralized Processing Cell (TDS) has observed from its records that C9 Corrections for Quarterly TDS Statements have repeatedly been submitted during Financial Year 2013-14. Please note that CPC (TDS) does not encourage frequent submission of C9 corrections. C9 Corrections are known as Revision of TDS Statement by way of Adding a new Challan and underlying deductees or the TDS data has not been reported correctly by way of omission of deductees, at the time of filing Original statements. It is very important to report correct and valid particulars of the deductor, PAN of the deductees in the TDS statement and Addition of new deductee rows and thereby, challans is not encouraged by CPC (TDS), except for inadvertent errors.

SEBI: 

SEBI specifies requisite infrastructure and controls for proper functioning of Foreign Portfolio Investors regime, infrastructure facilities and submission of periodic reports. it is imperative that SEBI approved Designated Depository Participants (“DDPs”) should have adequate infrastructure facilities and appropriate systems and controls in place. Every DDP shall submit periodic reports in the Annexure A to SEBI and such other reports as may be required by SEBI on the Segregation of activities, Infrastructure, Manual, Monitoring of systems and controls of FPI’s. To download & view Notification, please click here.

Filed Under: News & Updates, SEBI, TDS

Corporate Updates 26 April 2014

April 26, 2014 Leave a Comment

MCA: 

The Ministry of Corporate Affairs has issued a public notice today in the newspapers in the interest of the stakeholders stating that the 46 new forms pertaining to the New Act will be available for filing w.e.f 28-04-2014, 8 AM onwards and 17 other forms will be available for filing as an attachment (Manually filled & scan copies) with general e-Forms. Other e_forms related to annual filing, XBRL, IEPF & refund etc under Companies Act, 1956 will continue to be available for filing. Copy of the Public Notice is attached for perusal and future reference.

SEBI: 

SEBI revises guidelines for Liquidity enhancement scheme with an intent to boost liquidity in illiquid securities in the equity cash and equity derivatives segments vide its Circular dated 23-04-2014. The stock exchange may introduce liquidity enhancement schemes in equity cash and equity derivatives segments subject to certain guidelines and stock exchange shall formulate it’s own benchmarks for selecting the securities for liquidity enhancement with the broad objective of enhancing liquidity in illiquid securities.

Filed Under: MCA, News & Updates, SEBI

Corporate Updates 19 April 2014

April 19, 2014 Leave a Comment

SEBI:
SEBI has revised Clause 49 & 35B of the listing agreement to align with the provisions of the Companies Act, 2013, adopt best practices on corporate governance and to make the corporate governance framework more effective. The revised Clause 49 that would be applicable to all listed companies with effect from October 01, 2014. However, the provisions of Clause 49(VI)(C) as given in Part-B shall be applicable to top 100 listed companies by market capitalisation as at the end of the immediate previous financial year. Further, the revised Clause 35B would be applicable to all listed companies and the modalities would be governed by the provisions of Companies (Management and Administration) Rules, 2014.

RBI:

RBI through its Notification has advised all Banks for Differential Rate of Interest for Micro and Small Enterprises (MSEs) while pricing their loans than the other borrowers. However, banks should note that such differential rate of interest is not below the Base Rate of the bank. Banks should take into account the incentives available to them in the form of the credit guarantee cover of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and the zero risk weight for capital adequacy purpose for the portion of the loan guaranteed by the CGTMSE and provide differential interest rate for such MSE borrowers, than the other borrowers.

Filed Under: News & Updates, RBI, SEBI

Corporate Updates 16 April 2014

April 16, 2014 Leave a Comment

Stamp Duty (Proposed): 

The finance ministry has proposed uniform stamp duty rates on transactions of securities across states. For this, it has prepared a draft Bill to amend the Indian Stamp Act, 1989. In the draft, the ministry has suggested a stamp duty rate of 0.0001 per cent of the value of transaction on the sale of currency derivatives through off- market transactions. The draft provides for payment of the duty by the seller of the security through a new system, where exchanges will collect the duty and pass it on to state governments, thereby reducing their administrative costs. Currently, state government machinery collects the duty and not exchanges. In some states, the buyer pays the duty, while in some others the seller.

SEBI: 

It has observed by SEBI that the companies listed in Annexure ‘A’ have established connectivity with both the depositories viz NSDL and CDSL. The stock exchanges may consider as Companies are eligible for shifting from Trade for Trade Settlement (TFTS) to Normal Rolling Settlement subject to the conditions that at least 50% of other than promoter holdings as per clause 35 of Listing Agreement are in dematerialized mode before shifting the trading in the securities of the company from TFTS to normal Rolling Settlement and there are no other grounds/reasons for continuation of the trading in TFTS. To view & download, Please Click Here.

Filed Under: News & Updates, SEBI, Stamp Duty

Corporate Updates 12 April 2014

April 12, 2014 Leave a Comment

SEBI: 

In order to protect the interests of investors in security market and to promote the development, SEBI has Partially Modified the circular MRD/DP/22/2013 dated July 08, 2013, and has restore the initial and extreme margins for USD-INR contracts to pre July 08, 2013 rates which was increased to 100% by SEBI in consultation with RBI. Provisions of this Circular will be implemented with effect from April 15, 2014.

Reserve bank of India: 

RBI has decided to create a separate category of NBFCs, with the name, Non-Operative Financial Holding Company (NOFHC). A company seeking registration as an NOFHC shall first have received an in-principle approval for setting up a commercial bank from the Reserve Bank. The application for registration of NOFHC shall be made with the requisite information and documents to Reserve Bank of India, DBOD, Central Office, Mumbai. The Certificate of registration for the NOFHC will be issued by DNBS, Reserve Bank of India. For detailed circular, please click here.

Filed Under: News & Updates, RBI, SEBI

Corporate Updates 11 April 2014

April 11, 2014 Leave a Comment

RBI: 

RBI makes amendment in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000. A new definition of LLP has been added amendments have been made to Regulation 5 through which a person resident outside India or an entity incorporated outside not being FII or FVCI or QIB India shall be eligible to contribute foreign capital either by way of capital contribution or by way of acquisition/transfer of profit shares in the capital structure of an LLP under Foreign Direct Investment, subject to the terms and conditions as specified in Schedule 9. To download & view the notification, please Click Here.

SEBI: 

Securities and Exchange Board of India (SEBI) has been issuing various circulars/directions from time to time. In order to enable the users to have an access to all the applicable circulars/directions at one place, Master Circular no. CIR/MRD/DP/11 /2014 for Depositories has been prepared. This Master Circular is a compilation of the circulars/communications issued by SEBI up to March 31, 2014 and shall come into force from the date of its issue and shall supersede previous Master Circular CIR/MRD/DP/13/2013 dated April 15, 2013.

Filed Under: News & Updates, RBI, SEBI

Corporate Updates 03 April 2014

April 3, 2014 Leave a Comment

INCOME TAX: 
The Proposed Direct Tax Code 2013 allows Tax Audit not only by Chartered Accountant but also by Company Secretaries and Cost Accountants. Clause 88 of the Proposed Direct Tax code prescribes who needs to get the book audited under the direct tax code 2013 and it further says that the same needs to be audited by an accountant. The Term accountant is been defined in Clause 320(2) which says that accountant means Chartered Accountants, Company Secretaries, Cost Accountants any person having such qualifications as the Board may prescribe, for the purposes specified in this behalf.

Download: Proposed Direct Tax Code

SEBI: 
The Securities Appealate Tribunal, Mumbai in his recent judgement held where appellant failed to make disclosure of sale of pledged shares within two days of change in shareholding, appellant had violated PIT Regulations and guilty of Insider trading norms.

Filed Under: Income Tax, News & Updates, SEBI

Corporate Updates 27 March 2014

March 27, 2014 Leave a Comment

MCA: 

The Ministry of Corporate Affairs has notified 183 new sections of the Companies Act 2013 and some sub-sections of 13 sections which were already notified by notification dated 12th September 2013 and remaining schedule, by way of Notification dated 26th March, 2014. These sections have been notified to come into effect from 1st April 2014. With the notification of these sections, now a total of 283 sections of the new Act stand notified. As the Sections have been notified, it is expected that all relevant rules with forms will also be notified shortly.

Further, the Sections remaining to be notified are related to NFRA, IEPF, Compromise and arrangement, oppression and mismanagement, winding up, sick companies, special courts, NCLT etc.

SEBI: 

SEBI vide its Circular number CIR/CFD/DIL/1/2014 dated March 25, 2014 has prescribed a standard format for Auditors’ Certificate, under Clause 24 of the Listing Agreement which shall be followed by all the companies filing draft/ final scheme/ petition with the Stock Exchange(s) on or after March 25, 2014 for approval of any draft Scheme of amalgamation / merger / reconstruction, etc., as it was observed by SEBI that the Auditors’ Certificate filed by the companies are in different format and there was no standardization.

Filed Under: MCA, News & Updates, SEBI