CII Global Regulatory Update, October 2013

RegulatoryGLOBAL

UPDATE

October 2013, Volume 3, Issue 11

4GLOBAL UPDATE

ARTICLESNATIONAL UPDATE 1010Inside

Confederation of Indian Industry

DISCLAIMER CLAUSE This Regulatory Update has been compiled with a view to update readers and CII membership of changes on the covered topics in the Corporate Governance & Regulatory Affairs domain in the international as well as the domestic front. The compilation must not be taken as an exhaustive coverage of announcements and news nor should it be used as professional advice. Although, every endeavour has been made to provide exhaustive information, no claim would be entertained in the event any information/data/details/text is found to be inaccurate, incomplete, at variance with official data/information/details released through other sources prior or subsequent to release of the issue. This is only a compilation and not a reproduction of announcements / articles / items. CII does not subscribe to the views expressed in the items. These reflect the author’s personal views and in the event of any violation of IPR by the subscribers, CII would not be held responsible in any manner. Further, no part of this Update may be reproduced, copied or used without the prior permission of CII.

DOMESTIC UPDATES

National Updates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Appointments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

GLOBAL UPDATES

International Updates . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLES

New Companies Act – . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Facilitating Business Or…?

CII Submits detailed industry views on the . . . . . . . . . . . . . . 21

1st and 2nd Tranches of Draft Rules under

Companies Act, 2013

REPORTING AND COMPLIANCE

Emerging Issues in Recognition . . . . . . . . . . . . . . . . . . . . . . 13

of Revenue by Real Estate Developers

Contents

DISCLAIMER CLAUSE This Regulatory Update has been compiled with a view to update readers and CII membership of changes on the covered topics in the Corporate Governance & Regulatory Affairs domain in the international as well as the domestic front. The compilation must not be taken as an exhaustive coverage of announcements and news nor should it be used as professional advice. Although, every endeavour has been made to provide exhaustive information, no claim would be entertained in the event any information/data/details/text is found to be inaccurate, incomplete, at variance with official data/information/details released through other sources prior or subsequent to release of the issue. This is only a compilation and not a reproduction of announcements / articles / items. CII does not subscribe to the views expressed in the items. These reflect the author’s personal views and in the event of any violation of IPR by the subscribers, CII would not be held responsible in any manner. Further, no part of this Update may be reproduced, copied or used without the prior permission of CII.

DOMESTIC UPDATES

National Updates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Appointments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

GLOBAL UPDATES

International Updates . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLES

New Companies Act – . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Facilitating Business Or…?

CII Submits detailed industry views on the . . . . . . . . . . . . . . 21

1st and 2nd Tranches of Draft Rules under

Companies Act, 2013

REPORTING AND COMPLIANCE

Emerging Issues in Recognition . . . . . . . . . . . . . . . . . . . . . . 13

of Revenue by Real Estate Developers

Contents

GLOBAL REGULATORY UPDATE

NATIONAL

Release of 3rd and 4th tranche of draft Rules under Companies Act 2013

Standard Operating Procedure for Stock Exchanges in case of companies not complying with listing conditions

The Ministry of Corporate Affairs has

hosted the 3rd and 4th tranche of

d r a f t R u l e s f o r v i e w s f r o m

stakeholders. The draft Rules cover

Deposits, SFIO, National Financial

Regulatory Authority (NFRA) and

IEPF. The rules are attached and also

available on the Ministry's website for

comments from stakeholders. The

URL of the weblink is

http://ncbfeedback.mca.gov.in/

I. SEBI UPDATES

SEBI by its circular dated September

30, 2013 has decided to do away with

the practice of suspending the trading

of shares of listed companies which

have defaulted, as the suspension has

turned out to affect the interests of

non-promoters much more than those

of the promoters. In case of non-

compliant companies, other penalties

such as imposition of fines, freezing of

shares of the promoter and promoter

group, transferring the trading in the

shares of the company to separate

category, would be taken before

suspending the shares of the

company.

The Standard Operating Procedure

('SOP') to be followed by the Stock

Exchanges will be as follows:

Imposition of fines (on per day

basis) on the company for non-

compliance and delay in compliance

with continuous listing conditions.

In case of non-compliance for 2

consecutive quarters, moving the

shares of the non-compliant

company to "Z" Category, where

the trades would be settled on

"Trade for Trade" basis.

In case non-compliance continues,

freezing the shares of the promoter

and promoter group.

In order to provide an exit window

to the non-promoters, after 15 days

of suspension of the trade, the non-

promoters on the first day of every

trading week for a period of 6

months would be able to trade their

shares on the "Trade for Trade"

basis.

DOMESTIC UPDATES

SEBI permits contracts for pre-emption and options in shareholders agreements

SEBI (Listing of Specified Securities on Institutional Trading Platform) Regulations, 2013

SEBI by its notification dated October

3, 2013 has permitted contracts for

incorporating clauses including right

of first refusal, tag-along or drag-

along rights contained in the

shareholders agreements or articles

of association of the companies.

The contracts entered into by listed

companies can now contain an option

for purchase or sale of securities

subject to the following:

(a) the title and ownership of the

underlying securities are held

continuously by the selling party

for a minimum period of 1 year

from the date of entering into the

contract;

(b) the price or consideration payable

for the sale or purchase of the

underlying securities pursuant to

exercise of any option contained

therein, is in compliance with all

applicable laws; and

(c) the contract has to be settled by

way of actual delivery of the

underlying securities.

The contracts permitted under this

notification shall be in accordance

with the provisions of Foreign

Exchange Management Act, 1999.

Further, this notification shall not

affect or validate any contract which

has been entered into prior to the date

of this notification.

This notification supersedes the

earlier SEBI notification, i.e., S.O.184

(E) dated March 1, 2000.

SEBI has released the SEBI (Listing of

Specified Securities on Institutional

Trading Platform) Regulations, 2013.

This is to allow listing and issue of

capita l by smal l and medium

enterprises on institutional trading

platform without initial public

offering. Under these regulations, the

minimum amount for trading or

investment on the Institutional

Trading Platform ('ITP') is to be Rs. 10

Lakh with an easier exit option for

entities such as Angel Investors,

Venture Capital Funds and Private

Equities. The regulations provide that

the company would not make an IPO

while its specified securities are listed

on ITP but can raise capital through

private placement or rights issue

without an option for renunciation of

rights.

Eligibility Criteria: To be eligible for

listing on an ITP, the SME company has

to satisfy certain conditions including

not appearing on the defaulters list of

the RBI; no pending winding up

petition; no regulatory action has

been taken against the company

within five years prior to the date of

application for listing; and the

company has at least one full year's

audited financial statements, for the

immediately preceding financial year

at the time of making l isting

application. The regulations also

provided that an SME seeking to list on

ITP needs to fulfill any of the

investment criteria which is either a

minimum investment of Rs 50 lakh in

its equity shares by a category of fund

approved by the regulator; or by a

Qualified institutional buyer or a

merchant banker with a lock-in period

of three years from the date of listing;

or an investment in the equity capital

has been made in the SME by a

specialised international multilateral

agency or domestic agency or a public

financial institution; or it has received

money from a scheduled bank for its

project financing or working capital

requirements and a period of three

years has elapsed from the date of

such financing and the funds so

received have been fully utilized.

Promoter Holding Lock-in: The

regulations require 20% of the post

listing capital to be held by the

promoters for a period of three years

from date of listing.

Exit Norms: Regarding exit norms, a

company can exit from ITP subject to

the shareholders approving the exit

proposal by a special resolution

passed through postal ballot where

90% of total votes and the majority of

non-promoter votes have been cast in

favour of the proposal, and the stock

exchange approves such exit.

A company whose securities are listed

on ITP will have to exit the ITP if its

securities have been listed for 10

years, the company has paid up capital

of over Rs 25 crore, revenue of more

than Rs 300 crore and market

capitalisation of more than Rs 500

crore.

Delisting: The company can be

delisted if it does not comply with the

corporate governance norm(s) for

more than one year or with the listing

r e g u l a t i o n s s p e c i f i e d b y t h e

recognized stock exchange.

NATIONAL

Release of 3rd and 4th tranche of draft Rules under Companies Act 2013

Standard Operating Procedure for Stock Exchanges in case of companies not complying with listing conditions

The Ministry of Corporate Affairs has

hosted the 3rd and 4th tranche of

d r a f t R u l e s f o r v i e w s f r o m

stakeholders. The draft Rules cover

Deposits, SFIO, National Financial

Regulatory Authority (NFRA) and

IEPF. The rules are attached and also

available on the Ministry's website for

comments from stakeholders. The

URL of the weblink is

http://ncbfeedback.mca.gov.in/

I. SEBI UPDATES

SEBI by its circular dated September

30, 2013 has decided to do away with

the practice of suspending the trading

of shares of listed companies which

have defaulted, as the suspension has

turned out to affect the interests of

non-promoters much more than those

of the promoters. In case of non-

compliant companies, other penalties

such as imposition of fines, freezing of

shares of the promoter and promoter

group, transferring the trading in the

shares of the company to separate

category, would be taken before

suspending the shares of the

company.

The Standard Operating Procedure

('SOP') to be followed by the Stock

Exchanges will be as follows:

Imposition of fines (on per day

basis) on the company for non-

compliance and delay in compliance

with continuous listing conditions.

In case of non-compliance for 2

consecutive quarters, moving the

shares of the non-compliant

company to "Z" Category, where

the trades would be settled on

"Trade for Trade" basis.

In case non-compliance continues,

freezing the shares of the promoter

and promoter group.

In order to provide an exit window

to the non-promoters, after 15 days

of suspension of the trade, the non-

promoters on the first day of every

trading week for a period of 6

months would be able to trade their

shares on the "Trade for Trade"

basis.

DOMESTIC UPDATES

SEBI permits contracts for pre-emption and options in shareholders agreements

SEBI (Listing of Specified Securities on Institutional Trading Platform) Regulations, 2013

SEBI by its notification dated October

3, 2013 has permitted contracts for

incorporating clauses including right

of first refusal, tag-along or drag-

along rights contained in the

shareholders agreements or articles

of association of the companies.

The contracts entered into by listed

companies can now contain an option

for purchase or sale of securities

subject to the following:

(a) the title and ownership of the

underlying securities are held

continuously by the selling party

for a minimum period of 1 year

from the date of entering into the

contract;

(b) the price or consideration payable

for the sale or purchase of the

underlying securities pursuant to

exercise of any option contained

therein, is in compliance with all

applicable laws; and

(c) the contract has to be settled by

way of actual delivery of the

underlying securities.

The contracts permitted under this

notification shall be in accordance

with the provisions of Foreign

Exchange Management Act, 1999.

Further, this notification shall not

affect or validate any contract which

has been entered into prior to the date

of this notification.

This notification supersedes the

earlier SEBI notification, i.e., S.O.184

(E) dated March 1, 2000.

SEBI has released the SEBI (Listing of

Specified Securities on Institutional

Trading Platform) Regulations, 2013.

This is to allow listing and issue of

capita l by smal l and medium

enterprises on institutional trading

platform without initial public

offering. Under these regulations, the

minimum amount for trading or

investment on the Institutional

Trading Platform ('ITP') is to be Rs. 10

Lakh with an easier exit option for

entities such as Angel Investors,

Venture Capital Funds and Private

Equities. The regulations provide that

the company would not make an IPO

while its specified securities are listed

on ITP but can raise capital through

private placement or rights issue

without an option for renunciation of

rights.

Eligibility Criteria: To be eligible for

listing on an ITP, the SME company has

to satisfy certain conditions including

not appearing on the defaulters list of

the RBI; no pending winding up

petition; no regulatory action has

been taken against the company

within five years prior to the date of

application for listing; and the

company has at least one full year's

audited financial statements, for the

immediately preceding financial year

at the time of making l isting

application. The regulations also

provided that an SME seeking to list on

ITP needs to fulfill any of the

investment criteria which is either a

minimum investment of Rs 50 lakh in

its equity shares by a category of fund

approved by the regulator; or by a

Qualified institutional buyer or a

merchant banker with a lock-in period

of three years from the date of listing;

or an investment in the equity capital

has been made in the SME by a

specialised international multilateral

agency or domestic agency or a public

financial institution; or it has received

money from a scheduled bank for its

project financing or working capital

requirements and a period of three

years has elapsed from the date of

such financing and the funds so

received have been fully utilized.

Promoter Holding Lock-in: The

regulations require 20% of the post

listing capital to be held by the

promoters for a period of three years

from date of listing.

Exit Norms: Regarding exit norms, a

company can exit from ITP subject to

the shareholders approving the exit

proposal by a special resolution

passed through postal ballot where

90% of total votes and the majority of

non-promoter votes have been cast in

favour of the proposal, and the stock

exchange approves such exit.

A company whose securities are listed

on ITP will have to exit the ITP if its

securities have been listed for 10

years, the company has paid up capital

of over Rs 25 crore, revenue of more

than Rs 300 crore and market

capitalisation of more than Rs 500

crore.

Delisting: The company can be

delisted if it does not comply with the

corporate governance norm(s) for

more than one year or with the listing

r e g u l a t i o n s s p e c i f i e d b y t h e

recognized stock exchange.

the member opts for appellate

arbitration then a positive

difference of 50% of the

amount mentioned in the

arbitration award or Rs. 1.5 lac,

whichever is less and the

amount already released to the

investor at clause (i) above,

shall be released to the

investor.

iii. I n c a s e t h e a p p e l l a t e

arbitration award is in favour of

the investor and the member

opts for making an application

under Section 34 of the

Arbitration and Conciliation

Act, 1996 to set aside the

appellate arbitration award,

then a positive difference of

75% of the amount determined

in the appellate arbitration

award or Rs. 2 lac, whichever is

less and the amount already

released to the investor at

clause (i) and (ii) above, shall be

released to the investor.

iv. The amount payable by the

i n v e s t o r f o r a p p e l l a t e

arbitration has been reduced

from ̀ .30,000/- to ̀ 10,000/-.

To address the complaints received as

regards 'unauthorised trades', the

SEs' have to ensure that the contract

note issued by the member for

t r a n s a c t i o n s o w i n g t o n o n -

compliance of margin calls bears a

remark specifying the same and that

the member maintains a verifiable

record of having made such margin

calls and the clients not having

complied with the same.

SEBI has sought public comments on

the draft REIT Regulations by October

31, 2013 under which it has proposed

SEBI releases draft of Real Estate Investment Trusts Regulations, 2013 for public comments

SEBI- Streamlining Investor Grievance Redressal Mechanism

SEBI to streamline the investor

grievance redressal mechanism and

make it more investor friendly, has by

its circular dated September 26, 2013

decided to give monetary relief to

investors having claims up to Rs.10 Lac

from the Investor Protection Fund of

Stock Exchange ('IPF').

Some of the salient features of the

initiatives include:

a) The Investor Grievance Redressal

Committee ('IGRC') in addition to

the conciliation process can decide

upon the admissibility of claims,

wherein if the complaint is not

resolved upon the conclusion of

the conciliation proceedings, the

IGRC would ascertain the claim

amount admissible to the investor,

which the Stock Exchange ('SE')

would block from the deposit of

t h e c o n c e r n e d m e m b e r .

Subsequently the SE would give 7

days from the date the member

signs IGRC's directions to inform

the SE, if he intends to move to the

next level of resolution i.e.

arbitration.

b) In case, the member does not opt

for arbitration, the SE would,

release the blocked amount to the

investor after the aforementioned

7 days.

c) In case, the member opts for

arbitration and the claim value

admissible is not more than Rs. 10

lac, monetary relief would be given

as mentioned below:

i. 50% of the admissible claim

value or Rs. 0.75 lac, whichever

is less, would be released to the

investor.

ii. In case the arbitration award is

in favour of the investor and

the listing of Real Estate Investment

Trusts ('REITs'). The REITs would

under the regulations be allowed to

list on stock exchanges through Initial

Public Offer ('IPO') and would be

allowed to raise funds further through

Follow-On Offers.

Qualified REIT: In order to be listed the

REIT would need to be first registered

with SEBI in the prescribed manner.

C o m p l i a n c e s : A m o n g s t t h e

compliances which the REIT would

have to undertake, it would be

mandatory for all REITs to declare its

net asset value at least twice a year

post listing. In case of an IPO, the size

of the assets would need to be at least

Rs 1,000, the same proposed to ensure

that initially only large assets and

established players enter the market.

The minimum initial offer size of Rs

250 crore and minimum public float of

25 per cent is specified to ensure

adequate public participation and

float in the units.

Raising Funds: The REIT would be able

to raise funds from any investors,

resident or foreign. However, initially,

till the market develops, it is proposed

that the units of REITs may be offered

only to High Net Worth individuals

/ institution and therefore the

minimum subscr ipt ion s ize is

proposed be Rs 2 lakh and unit size to

be Rs 1 lakh.

Sponsors are also expected to

compulsorily maintain a certain

percentage of holding in the REIT "to

ensure a 'skin-in-the-game' at all

times.

Investments: REITs will be able to

invest in properties directly or through

SPVs. The REIT would not be allowed

to invest in vacant land or agricultural

land or mortgages other than in

mortgage backed securities. The

investment would be restricted to

assets based in India.

Investor's Approval: To safeguard the

investors' interests, their approval has

been made mandatory for cases such

as certain related party transactions,

transactions who's value exceeds 15%

of the REIT's assets, change in

sponsor, change in investment

strategy or delisting of units.

SEBI in its Board meeting held on

October 5, 2013 has approved the

draft SEBI (Fore ign Portfol io

I n v e s t o r s ) R e g u l a t i o n s , 2 0 1 3

("Regulations").

The SEBI (Foreign Portfolio Investors)

Regulations, 2013 have been framed in

light of the provisions of SEBI (Foreign

Institutional Investors) Regulations,

1995, Qualified Foreign Investors

( Q F I s ) f r a m e w o r k a n d t h e

recommendations of the "Committee

on Rationalization of Investment

Routes and Monitoring of Foreign

Portfolio Investments".

T h e s a l i e n t f e a t u r e s o f t h e

Regulations include:

1. Existing FIIs, Sub Accounts and

Qualified Foreign Investors (QFIs)

shall be merged into a new

investor class termed as "FPIs".

2. S E B I a p p r o v e d D e s i g n a t e d

Depository Participants (DDPs)

shall register FPIs on behalf of SEBI

subject to compliance with KYC

requirements.

3. The FPI shall be registered as one

of the following:

SEBI approves draft SEBI (Foreign Portfolio Investors) Regulations, 2013

(a) "Category I Foreign Portfolio

Investor" which shall include

Government and Government

related foreign investors;

(b) "Category II Foreign Portfolio

appropriately regulated broad

based funds, appropriately

regulated entities, broad based

funds whose investment

manager is appropriately

regulated, university funds,

u n i v e r s i t y r e l a t e d

endowments, pension funds;

(c) "Category III Foreign Portfolio

Investor" which shall include all

others not eligible under

Category I and II foreign

portfolio investors.

4. All existing FIIs and sub accounts

may continue to buy, sell or

otherwise deal in securities under

the FPI regime.

5. All existing Qualified Foreign

Investors (QFIs) may continue to

buy, sell or otherwise deal in

securities till the period of one year

from the date of notification of this

regulation. In the meantime, they

may obtain FPI registration

through DDPs.

6. The registration granted to FPIs by

the DDPs on behalf of SEBI shall be

permanent unless suspended or

cancelled by SEBI.

7. FPIs shall be allowed to invest in all

those securities, wherein Foreign

Institutional Investors (FIIs) are

allowed to invest.

8. Category I and Category II FPIs

shall be allowed to issue, or

otherwise deal in offshore

derivative instruments (ODIs),

directly or indirectly.

SEBI - Issues pertaining to primary issuance of debt securities

SEBI has been holding discussions

with issuers and various other market

participants regarding the issues

c o n c e r n i n g d e v e l o p m e n t o f

Corporate Bond Market. Based on the

suggestions received in the aforesaid

meetings, it has been decided to

implement the following measures:

I. Disclosure of Cash Flows: cash

flows emanating from the debt

securities shall be mentioned in

t h e P r o s p e c t u s / D i s c l o s u r e

D o c u m e n t , b y w a y o f a n

illustration.

II. Withdrawal of requirement to

upload bids on date-time priority:

allotment in the public issue of

debt securities should be made on

the basis of date of upload of each

application into the electronic

book of the stock exchange.

H o w e v e r , o n t h e d a t e o f

oversubscription, the allotments

should be made to the applicants

on proportionate basis.

III. Disclosure of unaudited financials

with limited review report: listed

issuers (who have already listed

their equity shares or debentures)

the member opts for appellate

arbitration then a positive

difference of 50% of the

amount mentioned in the

arbitration award or Rs. 1.5 lac,

whichever is less and the

amount already released to the

investor at clause (i) above,

shall be released to the

investor.

iii. I n c a s e t h e a p p e l l a t e

arbitration award is in favour of

the investor and the member

opts for making an application

under Section 34 of the

Arbitration and Conciliation

Act, 1996 to set aside the

appellate arbitration award,

then a positive difference of

75% of the amount determined

in the appellate arbitration

award or Rs. 2 lac, whichever is

less and the amount already

released to the investor at

clause (i) and (ii) above, shall be

released to the investor.

iv. The amount payable by the

i n v e s t o r f o r a p p e l l a t e

arbitration has been reduced

from ̀ .30,000/- to ̀ 10,000/-.

To address the complaints received as

regards 'unauthorised trades', the

SEs' have to ensure that the contract

note issued by the member for

t r a n s a c t i o n s o w i n g t o n o n -

compliance of margin calls bears a

remark specifying the same and that

the member maintains a verifiable

record of having made such margin

calls and the clients not having

complied with the same.

SEBI has sought public comments on

the draft REIT Regulations by October

31, 2013 under which it has proposed

SEBI releases draft of Real Estate Investment Trusts Regulations, 2013 for public comments

SEBI- Streamlining Investor Grievance Redressal Mechanism

SEBI to streamline the investor

grievance redressal mechanism and

make it more investor friendly, has by

its circular dated September 26, 2013

decided to give monetary relief to

investors having claims up to Rs.10 Lac

from the Investor Protection Fund of

Stock Exchange ('IPF').

Some of the salient features of the

initiatives include:

a) The Investor Grievance Redressal

Committee ('IGRC') in addition to

the conciliation process can decide

upon the admissibility of claims,

wherein if the complaint is not

resolved upon the conclusion of

the conciliation proceedings, the

IGRC would ascertain the claim

amount admissible to the investor,

which the Stock Exchange ('SE')

would block from the deposit of

t h e c o n c e r n e d m e m b e r .

Subsequently the SE would give 7

days from the date the member

signs IGRC's directions to inform

the SE, if he intends to move to the

next level of resolution i.e.

arbitration.

b) In case, the member does not opt

for arbitration, the SE would,

release the blocked amount to the

investor after the aforementioned

7 days.

c) In case, the member opts for

arbitration and the claim value

admissible is not more than Rs. 10

lac, monetary relief would be given

as mentioned below:

i. 50% of the admissible claim

value or Rs. 0.75 lac, whichever

is less, would be released to the

investor.

ii. In case the arbitration award is

in favour of the investor and

the listing of Real Estate Investment

Trusts ('REITs'). The REITs would

under the regulations be allowed to

list on stock exchanges through Initial

Public Offer ('IPO') and would be

allowed to raise funds further through

Follow-On Offers.

Qualified REIT: In order to be listed the

REIT would need to be first registered

with SEBI in the prescribed manner.

C o m p l i a n c e s : A m o n g s t t h e

compliances which the REIT would

have to undertake, it would be

mandatory for all REITs to declare its

net asset value at least twice a year

post listing. In case of an IPO, the size

of the assets would need to be at least

Rs 1,000, the same proposed to ensure

that initially only large assets and

established players enter the market.

The minimum initial offer size of Rs

250 crore and minimum public float of

25 per cent is specified to ensure

adequate public participation and

float in the units.

Raising Funds: The REIT would be able

to raise funds from any investors,

resident or foreign. However, initially,

till the market develops, it is proposed

that the units of REITs may be offered

only to High Net Worth individuals

/ institution and therefore the

minimum subscr ipt ion s ize is

proposed be Rs 2 lakh and unit size to

be Rs 1 lakh.

Sponsors are also expected to

compulsorily maintain a certain

percentage of holding in the REIT "to

ensure a 'skin-in-the-game' at all

times.

Investments: REITs will be able to

invest in properties directly or through

SPVs. The REIT would not be allowed

to invest in vacant land or agricultural

land or mortgages other than in

mortgage backed securities. The

investment would be restricted to

assets based in India.

Investor's Approval: To safeguard the

investors' interests, their approval has

been made mandatory for cases such

as certain related party transactions,

transactions who's value exceeds 15%

of the REIT's assets, change in

sponsor, change in investment

strategy or delisting of units.

SEBI in its Board meeting held on

October 5, 2013 has approved the

draft SEBI (Fore ign Portfol io

I n v e s t o r s ) R e g u l a t i o n s , 2 0 1 3

("Regulations").

The SEBI (Foreign Portfolio Investors)

Regulations, 2013 have been framed in

light of the provisions of SEBI (Foreign

Institutional Investors) Regulations,

1995, Qualified Foreign Investors

( Q F I s ) f r a m e w o r k a n d t h e

recommendations of the "Committee

on Rationalization of Investment

Routes and Monitoring of Foreign

Portfolio Investments".

T h e s a l i e n t f e a t u r e s o f t h e

Regulations include:

1. Existing FIIs, Sub Accounts and

Qualified Foreign Investors (QFIs)

shall be merged into a new

investor class termed as "FPIs".

2. S E B I a p p r o v e d D e s i g n a t e d

Depository Participants (DDPs)

shall register FPIs on behalf of SEBI

subject to compliance with KYC

requirements.

3. The FPI shall be registered as one

of the following:

SEBI approves draft SEBI (Foreign Portfolio Investors) Regulations, 2013

(a) "Category I Foreign Portfolio

Government and Government

related foreign investors;

(b) "Category II Foreign Portfolio

appropriately regulated broad

based funds, appropriately

regulated entities, broad based

funds whose investment

manager is appropriately

regulated, university funds,

u n i v e r s i t y r e l a t e d

endowments, pension funds;

(c) "Category III Foreign Portfolio

Investor" which shall include all

others not eligible under

Category I and II foreign

portfolio investors.

4. All existing FIIs and sub accounts

may continue to buy, sell or

otherwise deal in securities under

the FPI regime.

5. All existing Qualified Foreign

Investors (QFIs) may continue to

buy, sell or otherwise deal in

securities till the period of one year

from the date of notification of this

regulation. In the meantime, they

may obtain FPI registration

through DDPs.

6. The registration granted to FPIs by

the DDPs on behalf of SEBI shall be

permanent unless suspended or

cancelled by SEBI.

7. FPIs shall be allowed to invest in all

those securities, wherein Foreign

Institutional Investors (FIIs) are

allowed to invest.

8. Category I and Category II FPIs

shall be allowed to issue, or

otherwise deal in offshore

derivative instruments (ODIs),

directly or indirectly.

SEBI - Issues pertaining to primary issuance of debt securities

SEBI has been holding discussions

with issuers and various other market

participants regarding the issues

c o n c e r n i n g d e v e l o p m e n t o f

Corporate Bond Market. Based on the

suggestions received in the aforesaid

meetings, it has been decided to

implement the following measures:

I. Disclosure of Cash Flows: cash

flows emanating from the debt

securities shall be mentioned in

t h e P r o s p e c t u s / D i s c l o s u r e

D o c u m e n t , b y w a y o f a n

illustration.

II. Withdrawal of requirement to

upload bids on date-time priority:

allotment in the public issue of

debt securities should be made on

the basis of date of upload of each

application into the electronic

book of the stock exchange.

H o w e v e r , o n t h e d a t e o f

oversubscription, the allotments

should be made to the applicants

on proportionate basis.

III. Disclosure of unaudited financials

with limited review report: listed

issuers (who have already listed

their equity shares or debentures)

(STAs) and the Depositories / Issuer

companies (in-house STAs) for

effecting transmission of securities

h e l d i n p h y s i c a l a s w e l l a s

dematerialized mode. With a view to

make the transmission process more

efficient and investor friendly, it has

been decided that:

In case of transmission of securities in dematerialized mode, where the securities are held in a single name without a nominee, the existing threshold limit of ` 1,00,000 (Rupees One lakh only) per beneficiary owner account has now been revised to ` 5,00,000 (Rupees Five lakh only), for the purpose of following simplified documentation, as already prescribed by the depositories vide bye-laws / operating instructions.

In case of transmission of securities held in physical mode:

a. where the securities are held in single name with a nominee, STAs/issuer companies shall follow the standardized documentary requirement

b. where the securities are held in single name without a nominee, the STAs/issuer companies shall follow, in the normal course, the simplified documentation, for a threshold limit of ` 2,00,000 (Rupees Two lakh only) per issuer company. However, the Issuer companies, at their discretion, may enhance the value of such securities.

The timeline for processing the transmission requests for securities held in dematerialized mode and physical mode shall be 7 days and 21 days respectively, after receipt of the prescribed documents.

In order to ensure that adequate disclosures are made to help investors

SEBI amends formats under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011(Regulations).

in taking an informed decision, it has been decided to modify the formats for disclosures under regulation 29 (1), 29 (2) and 31 of the Regulations.

The RBI by its circular dated September 19, 2013 has decided to extend its permit in allowing the well managed domest ic scheduled commercial banks to open branches in Tier 1 centres of the country subject to their fulfilling certain criteria.

The banks seeking to open branches in Tier 1 centres will have to ensure that

(a) 25% of the total number of branches are opened in unbanked rural centres i.e. Tier 5 and 6 centres of the country; and

(b) the total number of branches in Tier 1 centres do not exceed the total number of branches opened in Tier 2 to 6 centres and in all the centres in the North Eastern States (including) Sikkim.

Further in case the bank is unable to open all the branches it is eligible to open, in Tier 1 centres in a year, it may carry-over and open them in the succeeding 2 years. However the shortfall in respect of opening branches in Tier 2 to 6 centres, or in unbanked rural centres (Tiers 5 to 6 centres) during the financial year, must necessarily be rectified within the next financial year.

The RBI by its circular dated September 27, 2013 has decided to consider applications from Urban Co-operative Banks ('UCB') for being treated as a 'financial institution' under Second Schedule of the RBI Act, 1934.

The UCB eligibility criteria requires the

II. RBI UPDATES

Branch Opening Regulations extended

RBI issues norms for UCBs to be included as financial institutions

who are in compliance with the

listing agreement, may disclose

unaudited financials with limited

review report in the offer

document, as filed with the stock

exchanges in accordance with the

listing agreement, instead of

audited financials, for the stub

p e r i o d , s u b j e c t t o m a k i n g

necessary disclosures in this

regard in offer document including

risk factors.

IV. Disclosure of contact details of

Debenture Trustees in Annual

Report: It has been decided to

amend the Listing Agreement for

Debt Securities as specified by

inserting a clause stating that the

companies, which have listed their

debt securities, shall disclose the

name of the debenture trustees

with contact details in their annual

report and as ongoing basis, on

their website, to enable the

investors to forward their

grievances to the debenture

trustees.

The provisions in Para I of this circular

shall be applicable for the debt

securities issued, in accordance with

SEBI (Issue and Listing of Debt

Securities) Regulations, 2008, on or

after December 01, 2013. The

provisions in Para II and III of this

circular shall be applicable for the

draft offer document for issuance of

debt securit ies f i led with the

designated stock exchange on or after

November 01, 2013. The provisions in

Para IV shall be applicable from

December 01, 2013 and all stock

exchanges are advised to carry out the

a m e n d m e n t s i n t h e i r L i s t i n g

Agreement.

SEBI has reviewed the process being

followed by the Share Transfer Agents

Standardisation and Simplification of Procedures for Transmission of Securities

fulfillment of the following financial conditions:

a) Demand and Time Liabilities of not less than `750 crore on a continuous basis for one year;

b) CRAR of minimum 12%;

c) Continuous net profit for the previous three years;

d) Gross NPAs of 5% or less;

e) Compliance with CRR / SLR requirements and

f) N o m a j o r r e g u l a t o r y a n d supervisory concerns.

T h e R B I a f t e r r e c e i v i n g representations on account of the depreciating rupee value has by its circular dated September 25, 2013 decided to protect the exporters from the rupee fluctuations. The banks are now permitted to set monthly export credit limits for the borrowers in foreign currency based on the prevalent position of their current assets, current l iabi l i t ies and exchange rates.

Export Credit Limits in Foreign Currency

No Refinancing of ECB at a higher all-in-cost

Discontinuance of submitting details pertaining to expenses incurred in maintaining Branch Offices situated abroad

The RBI from October 01, 2013 has decided to discontinue allowing borrowers to raise ECB at a higher all-in-cost to refinance / reschedule an existing ECB. However, the borrowers can raise fresh ECB at a lower all-in-cost, subject to the condition that the outstanding maturity of the original ECB is either maintained or extended.

By its circular dated September 20, 2013, the RBI has decided to discontinue the practice of requiring the AD to submit half yearly statements in Form ORA to the Regional Off ice of RBI which constitute the details pertaining to the remittances and recurring expenses incurred by the Indian companies for maintaining their trading office / non-trading office / branch office/ representative office established abroad. However, the ADs may continue to keep records of the approvals granted for the opening of such offices by the Indian companies.

Clarification for ECB proceeds for acquisition of shares under the Government's disinvestment programme of PSUs

Lowering of maturity period for foreign currency borrowings undertaken by AD till November 30, 2013

The RBI has issued a clarification on September 30, 2013 by which the ECB can be availed for multiple rounds of disinvestment of the PSU shares under the Government disinvestment programme and not restricted to the first stage of acquisition of shares and the mandatory second stage offer to the public.

The RBI by its circular dated September 25, 2013 has decided to lower the maturity period from 3 years to 1 year for the foreign currency borrowings made by AD Category- I banks made on or before November 30, 2013 for the purpose of availing of the swap facility from the RBI. After t h e a f o r e s a i d d a t e , t h e s a i d borrowings will have to be of a minimum maturity of 3 years.

APPOINTMENTS

Mr Melwyn Rego elevated as Deputy MD at IDBI Bank

Bajaj Allianz appoints Mr Anuj Agarwal as Managing Director

Mr Vikram Kirloskar is new SIAM President

Mr Ashok Vemuri appointed as CEO of iGate

Mr Ashok K. Kantha appointed as next Ambassador to China

Mr M.K. Goel appointed PFC Chairman

Mr Tom Albanese joins Vedanta Resources Holdings

Zenith Optimedia appoints Ms Anupriya Acharya as group CEO

Mr V Bhaskar appointed as the C h a i r m a n o f A P E l e c t r i c i t y Regulatory Commission

NSEL appoints Mr Saji Cherian as new CEO & MD

Mr MK Lokesh is new ambassador to Switzerland

Escorts appoints Mr Nikhil Nanda as Managing Director

Ascendas appoints Mr Lee Fu Nyap as CEO of India operations

Tata Steel names Mr TV Narendran as MD; to assume operations from November 1

Hitachi Home & Life Solutions appoints Mr Shoji Tsubokuta as new MD

Mr Ravi Bangar appointed as High Commissioner to Cyprus

Mr Pawan Goenka appointed as Mahindra's executive director

BPL Medical Technolgies appoints Mr Sunil Khurana as CEO

PepsiCo names Mr Sanjeev Chadha as CEO, AMEA region

NDTV appoints Mr Soli Sorabjee as independent ombudsman

SKS Microfinance reappoints Mr R Ramachandra Rao as MD & CEO

Mr Sundeep Sikka appointed chairman of AMFI