Corporate Professionals Blog

SEBI, with the intent of investor protection and enabling them to take better and well informed investment decisions, has vide its Circulars dated 25th May 2016 and 27th May 2016 brought in certain amendments to the LODR Regulations (primarily Regulations 33 & 52). These Regulations pertain to the requirements of submitting Financial Results of the Company. As per the extant provisions, alongwith the Audited results for the financial year, Form A/ Form B were needed to be submitted, depending upon there being any Auditors’ Qualifications or not. Now, vide the above mentioned Circulars, it has been decided to streamline the process and do away with the requirement of filing these Forms. The listed Companies are now required to disseminate the cumulative impact of all the audit qualifications in a separate format, simultaneously, while submitting the annual audited financial results to the stock exchanges. The provisions of the said Circulars are applicable...

Ever Wondered what’s your Business Worth ? Our Valuation Team has prepared a crisp Video on  “ How to Value a Company” for its broad understanding. Do let us know your feedback. “Knowing what business is worth and what determines its value is prerequisite for intelligent decision making”. Corporate valuations form the basis of corporate finance activity including M&A, fund raising, Sale of businesses, Succession planning and also to meet regulatory and accounting requirements. The rapid globalization of the world economy has created both opportunities and challenges for organizations leading to uncertainty blowing across global markets and raising the importance of independent valuations all over the world. Justifying the value of businesses has grown more complex and challenging as its been accepted that valuation of closely held / infrequently traded listed shares is not an exact science and depends upon a number of factors like purpose, minority/ controlling interest, sta...

 Offshore Derivative Instruments (ODIs) Following suitable amendments to the Regulations/circulars are proposed to be made vis-à-vis ODIs: Stricter Know your client (KYC) & Anti Money Laundering (AML): Indian KYC/AML norms will now be applicable to all ODI issuers. ODI Issuers shall be required to identify and verify the beneficial owners/ the person(s) who control the operations in the subscriber entities i.e. holding more than 25% in case of a company and 15% in case of partnership firms/ trusts/ unincorporated bodies. Prior permission for Transferability: ODI subscribers will have to seek prior permission of the original ODI issuer for further/onward issuance/transfer of ODIs. Reporting of complete transfer trail of ODIs: in monthly reports on ODIs, all the intermediate transfers during the month would also be required to be reported KYC Review: At the time of on-boarding and once every three years for low risk clients At the time of on-boarding and eve...

The merger of Forward market commission (FMC) with Security Exchange Board of India (SEBI) has enlarged the scope of market regulation for SEBI by bringing commodity derivative market into its domain. Since merger of two regulators in September 2015 in an attempt to align commodity market with equity market, SEBI has been taking several initiatives. In line with this objective, of late SEBI has issued yet another circular dated 25th April 2016 for mandating Commodity Derivative Brokers to disclose their proprietary trading and details of pro-account trading terminals to its clients. Discloser of proprietary trading For fulfilling the purpose of increased transparency in dealings between the commodity broker and their clients, the provision of SEBI circular (Dated 19th Nov. 2003) are extended to commodity derivative markets. The provisions of the circular requires that every broker shall disclose to his client whether he does proprietary trading as well or not. The ...

Vide Press Note 12 of 2015 series, issued on 24th November, 2015, DIPP allowed only those single brand retail trading entities to undertake retail trading through e-commerce, which operate through brick and mortar stores in India. The object of the press note was to bring more investments and also the high quality goods in India with the aim to growth and technological development of India. However the press note fails to define the target public for sale of the such goods through e-commerce and also defining region and coverage of the e-commerce sale considering the opening of the brick and mortar store, which leads to the interpretation of opening of one brick and mortar store in India and engaging into B2C e-commerce in the entire country thereby defeating the very purpose of the press note for brining in investments into India since the e-commerce model does not involve big investments. Thus as a result DIPP started receiving number of queries with respect to suc...

Infrastructure Sector companies and certain NBFCs allowed to raise ECB (External Commercial Borrowings) for shorter duration The Reserve Bank of India (RBI) with a view of development of Infrastructure of India has expanded the scope of funding through ECB, particularly for infrastructure sector, vide issuance of circular: A.P. (DIR Series) Circular No.56; dated 30th March, 2016. Now, infrastructure sector companies, non-banking finance companies (NBFCs), infrastructure finance companies (NBFC-IFCs), asset finance companies (NBFC-AFCs), holding companies and Core Investment Companies (CICs) will also be eligible to raise ECB under Track I of the ECB framework issued by the RBI in November, 2015. Earlier position: In the said ECB framework (released in November, 2015), RBI had detailed three tracks through which Indian companies could borrow from offshore market. Track-I allowed companies to borrow foreign currency loans with a minimum maturity of three-fiv...

DIPP issued Press Note 1 and 2 (2016 Series) - liberalizing FDI norms in insurance and pension sector On 23rd March, 2016, the Department of Industrial Policy and Promotion (DIPP), Government of India, issued Press Note 1 and 2 of 2016 Series, thereby liberalizing the extant FDI Policy on insurance and pension sector, respectively. The amendment in the said sectors is as following: Amendment in Insurance Sector Prior to the issuance of Press Note 1 (2016 Series), 26% FDI was permitted in the insurance sector under the automatic route and government approval was required for FDI beyond 26% and up to 49%. Now, up to 49% FDI is permitted under the automatic route, subject to prescribed conditions. In addition, it has now been prescribed that the investment under the automatic route up to 49% shall be subject to verification by the Insurance Regulatory and Development Authority of India. Amendment in Pension Sector Prior to issuance of Press Note...

The result of the long consultative process undertaken by the Company Law Committee constituted by the Ministry of Corporate Affairs in an attempt to revamp the Companies Act 2013 is out in form of the Companies (Amendment) Bill 2016 (‘Bill’). The Bill in the wake of facilitating ease of doing business aims to bring some radical changes in the Companies Act 2013. Further the Bill will certainly bring cheer among the corporates as it address some of their major concerns. - See more at: http://www.companiesact.in/Companies-Act-2013/News-Details/20712/Key%20Highlights%20of%20The%20Companies%20%28Amendment%29%20Bill,%202016

The Capital Market Regulator, SEBI, has cleared the air around certain grey areas that persisted under the SEBI (Share Based Employee Benefit) Regulations, 2014, which got notified on 28th October, 2014. SEBI, on 21st October, 2015, had issued a FAQ paper which clarified the ambiguities prevailing on part of Regulation 3(12) of the SBEB Regulations, i.e. with regard to appropriation of un-appropriated inventory under an Employee Benefit Scheme. Further, on 20th November, 2015, SEBI issued another FAQ document on the Regulations, thereby clarifying that Independent Directors can exercise the options granted to them before promulgation of these Regulations. A gist of both the FAQs is given herein below: Clarification w.r.t to Appropriation of Inventory held by the Trust as on the date of the Notification of the Regulations in the year 2014. As per Regulation 3(12) of the SEBI (SBEB) Regulations, 2014, The un-appropriated inventory of shares wh...

We are aware that the Capital Market Regulator, SEBI, with a view to consolidate and streamline the provisions of existing listing agreements for different segments of capital market into one single document, has came up with new Listing Regulations on September 02, 2015 for which all the listed entities have been given a time period of 90 days for complying with its provisions. That is, the new Regulations will become effective w.e.f 2nd December 2015, only 2 weeks to go. As per the Regulations, various Policies, viz. Preservation Policy, Archival Policy and Materiality Policy are needed to be prepared by the Companies, with Archival & Materiality policies even to be uploaded on the Company’s’ websites. Since only a few days are left, so it’s advisable that Companies gear up for preparation of these Policies and making requisite disclosures. Further, SEBI has already issued the Uniform Listing Agreement, needed to be executed between the Listed Companies ...

Knowing what business is worth and what determines its value is prerequisite for intelligent decision making.  Corporate valuations form the basis of corporate finance activity including capital raising, M&A and also to meet regulatory / accounting requirements or for voluntary purpose. Justifying the value of businesses has grown more complex and challenging as it’s been accepted that valuation is not an exact science and depends upon a number of factors like purpose, stage, financials, industry, management and promoters strengths etc. Professional experience of valuer has a big role in choosing and applying out of different methodologies and concluding value. As of now there are no formal standards for business valuation in India (barring ICAI Valuation Standard which too is recommendatory) specifically for unlisted and private companies, numerous conceptual controversies still remain, even among the most prominent valuation practitioners. Interestingly, the answer to thi...

BACKGROUND On 15th January, 2015, the Capital Market Regulator, SEBI, came up with a new set of Regulations that overhauled a 23-year-old regulatory regime governing the arena of Insider Trading in the Capital Markets. Though the new Regulations seem to be more promising and equipped to ensure better compliance and enforcement, however at the same time the obligations attached, the sensitivity and penalty associated under the new insider trading norms have made it a reason to worry for the Corporates and particularly the Compliance Heads. THE GREY AREAS Ms. Mohini Varshney Assistant Vice President +919971673332 mohini@indiacp.com The new regulations have certain grey areas that need a lucid visualization. One of the most talked about ambiguity that has been pulled out of the discussions and interpretation is the ESOP ISSUE-their Grants/ Exercise. The erstwhile Insider Trading Regulations, 1992, had made a separate room to keep the ESOPs in place with the s...

Dissemination Board - not a easy road for promoters & directors from Corporate Professionals

The Market Regulator, SEBI with the objective of bringing the basic framework governing the regime of Insider Trading practices in line with the dynamic global scenario and to tighten the gaps of existing norms, has notified the New PIT Regulations to be renowned as SEBI (Prohibition of Insider Trading) Regulations, 2015, on 15th January, 2015 . These Regulations will be effective w.e.f 15th May, 2015. Ms. Anjali Aggarwal Vice President +919971673336 anjali@indiacp.com Insider trading has always been an issue on the talk. SEBI’s move towards reformation of the extant Regulations is a significant step ensuring confidentiality in the operations and to provide a well governed legal system of the corporate sectors on one hand and to refrain any person from unfair trading in securities who has privilege of having access to unpublished information of any company. The new Regulations seem to be more promising and equipped to ensure better compliance and enforcement, theref...

SEBI on March 24, 2015 issued overhauling amendments to the SEBI (Delisting of Equity Shares) Regulation, 2009 (the Delisting Regulations) along with SEBI (Substantial Acquisition of Shares and Takeover) Regulation, 2011 (SAST/ Takeover Regulations) and SEBI (Buy Back of Securities) Regulation, 1998 (the Buyback Regulations). Ms. Anjali Aggarwal Vice President +919971673336 anjali@indiacp.com Taking into account the slower pace of Delisting offers in India, SEBI has revamped the norms that reduce the time taken for completing the process. It has also introduced a new concept of Delisting Offers into the SAST Regulations, 2011, which aim to provide a new opportunity to the Acquirer to even go in for delisting, by giving a Takeover Open Offer. A major common amendment by the Board in all the three Regulations is that a Stock Exchange mechanism will be provided for facilitating the tendering of shares by the shareholders and settlement of the same by the Stock Exchang...