Brief Update On Sebi And Corporate Law
SEBI
- REGULATIONS
- Securities and Exchange Board of India (Portfolio Managers)(Second Amendment)
Regulations, 2021
[Issued by the Securities and Exchange Board of India vide NotificationNo. SEBI/LAD- NRO/GN/2021/16dated April 26, 2021]
Portfolio Managers, while undertaking the process of change in control, will now be required to obtain prior approval from SEBI in prescribed format.
2. Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2021
[Issued by the Securities and Exchange Board of India vide NotificationNo. SEBI/LAD- NRO/GN/2021/19dated May 05, 2021]
The reference to ‘Institutional Trading Platform’ has been amended to ‘Innovators Growth Platform’ (‘IGP’). Further, the takeover limit of 25% have been relaxed to 49% in case of securities listed on IGP. The continual disclosure limit is also relaxed to 10% instead of 5%.
3. Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2021
[Issued by the Securities and Exchange Board of India vide NotificationNo. SEBI/LAD- NRO/GN/2021/18dated May 05, 2021]
References of ‘Institutional Trading Platform’ have been amended to ‘Innovators Growth Platform’ (‘IGP’).Further, reference to ‘Accredited Investors’ has been replaced with ‘Innovators Growth Platform Investors’ (‘IGPI’). Also, SEBI has made certain listing related amendments regarding IGP.
- Securities and Exchange Board of India (Intermediaries) (Second Amendment)
Regulations, 2021
[Issued by the Securities and Exchange Board of India vide NotificationNo. SEBI/LAD- NRO/GN/2021/20dated May05, 2021]
SEBI has introduced new regulation 30A in relation ‘Special procedure for action on expulsion from membership of the stock exchange(s) or clearing corporation(s) or termination of all the depository participant agreements with depository(ies)’. The regulation is a 1st step towards faceless proceedings. The highlight of this procedure is that no opportunity of personal hearing shall be granted while disposing of the proceedings under this regulation.
5. Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2021
[Issued by the Securities and Exchange Board of India vide NotificationNo. SEBI/LAD- NRO/GN/2021/23dated May 05, 2021]
SEBI has directed various intermediaries like Stock Brokers, Merchant Bankers, Registrars to an Issue and Share Transfer Agents, Debenture Trustees, Bankers to Issue, Credit Rating Agencies and Depositories and Participants to pay fees by way of direct credit in the bank account through online payment using SEBI payment gateway.
6. Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2021
[Issued by the Securities and Exchange Board of India vide NotificationNo. SEBI/LAD- NRO/GN/2021/21dated May 05, 2021]
SEBI has revised the investment limits by all 3 Categories of Alternate Investment Funds (AIFs)
i.e. Categories I / II/ III. SEBI has also substituted Regulation 20 relating to ‘General Obligations’ of AIFs bring in references to Code of Conduct of AIFs also thereby introducing Schedule Four –’Code of Conduct forAlternative Investment Funds’.
- Securities and Exchange Board of India (Intermediaries) (Second Amendment)
Regulations, 2021
[Issued by the Securities and Exchange Board of India vide NotificationNo. SEBI/LAD- NRO/GN/2021/20dated May 05, 2021]
Amongst many changes, SEBI has introduced reference to feminine gender throughout the regulations. Further, it has replaced the reference of ‘Institutional Trading Platform’ to ‘Innovators Growth Platform’ (‘IGP’). It has reduced the procedure for reclassification of promoters, business responsibility reporting, insolvency related reporting, etc.
- CIRCULARS
1. Relaxations relating to procedural matters –Issues and Listing
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/CFD/ DIL2/CIR/P/2021/552dated April 22, 2021]
The relaxations provided by SEBI vide Circulars No. SEBI/HO/CFD/DIL2 /CIR/ P/2020/78 dated May 6, 2020, as amended from time to time, with regard to rights issue by Listed Companies has been extended till September 30, 2021 subject to certain amendments.
2. Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/ HO/ MIRSD/ MIRSD_CRADT/ P/ CIR/ 2021/ 554dated April 27, 2021]
SEBI has prescribed the rating procedure. Credit Rating Agencies will now have to assign the word ‘provisional’ as a prefix while providing any provisional rating for debt instruments. SEBI has laid the scenarios in which provisional ratings have to be issued, the period for which such ratings shall remain as provisional ratings, disclosures in the press release / rating rationale, steps to undertaken in case the provisional ratings are not accepted by the issuer.
3. Alignment of interest of Key Employees of Asset Management Companies (AMCs) with the Unitholders of the Mutual Fund Schemes
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/IMD- I/DOF5/P/CIR/2021/553 dated April 28, 2021]
The management of the risk return profile of the Mutual Funds schemes rests with the Asset Management Companies (AMCs) and the Key Employees.In order to align the interest of the Key Employees of the AMCs with the unitholders of the mutual fund schemes, it has been decided that a part of compensation of the Key Employees of the AMCs shall be paid in the form of units of the scheme(s).
SEBI has prescribed the quantum of compensa- tion to be given in the form of units of respective schemes, redemption of those specific units, clawback in the event of violation / negligence, oversight of the compliance of this circular and who would be termed as Key employees.
This Circular shall be effective from July 01, 2021.
- Disclosure of the following only w.r.t schemes which are subscribed by the investor: (a) risk- o-meter of the scheme and the benchmark along with the performance disclosure of the scheme vis-à-vis benchmark and (b) Details of the portfolio
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/IMD-
II DOF3/P/CIR/2021/555 dated April 29, 2021]
With effect from June 01, 2021, Mutual Fund/AMCs will have to, in addition to the existing disclosures, disclose risk-o-meter of the scheme and benchmark while disclosing the performance of schemevis-à-vis benchmark. Mutual Funds/AMCs will further have to send the details of the scheme portfolio while commun- icating the fortnightly, monthly and half-yearly statement of scheme portfolio via email
- Relaxation from compliance with certain provisions of the SEBI (Listing Obligations Disclosure Requirements) Regulations, 2015 due to the CoVID-19 pandemic
[Issued by the Securities and Exchange Board of India vide Circulars No. SEBI/HO/CFD/ CMD1/P/CIR/2021/556and SEBI/HO/DDHS/
DDHS_Div1/P/CIR/2021/557dated April 29,
2021]
SEBI has extended the due date for compliance till June 30, 2021 for the following compliances which fall within the purview of SEBI (Listing Obligations Disclosure Requirements) Regulations, 2015 like Annual Secretarial Compliance Report, Quarterly results / Annual Audited Financial Statements and Statement of Deviationor Variation in Use of Funds.
The relaxation with respect to filing of results on or before June 30, 2021 has been extended to entities with have debt instruments listed on stock exchanges.
6. Relaxation in timelines for compliance with regulatory requirements
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/MIRSD/ DOP/P/CIR/2021/559 dated April 29, 2021]
SEBI has provided a long list of activities undertaken Trading Members / Clearing Members / Depository Participants / KYC Registration Agencies for which the timelines for compliances have been extended to June 30, 2021 or July 30, 2021 and in some case upto 15
days after July 31, 2021.
7. Timelines for updation of Scheme Information Document (SID) and Key Information Memorandum (KIM)
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2021/0560 dated April 30, 2021]
SEBI vide circular no.SEBI/HO/IMD/DF2/ CIR/P/2021/024 dated March 04, 2021has prescribed the procedure for updation of SID and KIMof Mutual Fundschemes. It has now specified the timelines within which the MFs have to undertake this updation.
Further, for the period ended March 31, 2021, SEBI has granted an extension till May 31, 2021 for completion of the updation process.
8. Relaxation in timelines for compliance with regulatory requirements by Debenture Trustees due to the CoVID-19 pandemic
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/MIRSD/ CRADT/CIR/P/2021/561 dated May 03, 2021]
SEBI vide circular no.SEBI/HO/IMD/ DF2/CIR/ P/ 2021 / 024 dated March 04 , 2021 has prescribed the procedure for updation of SID and KIMof Mutual Fundschemes. It has now specified the timelines within which the MFs have to undertake this updation.
9. Business responsibility and sustainability reporting by listed entities
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/CFD/CMD- 2/P/CIR/2021/562 dated May 10, 2021]
Currently, top 1000 listed entities based on market capitalization (calculated as on March 31 of every financial year) are submitting Business Responsibility Report (BRR) alongwith their respective Annual Reports.
These top 1000 listed entities base on market capitalization will now have to provide Business Responsibility and Sustainability Report (BRSR) for FY 2022-2023 onwards. SEBI has prescribed necessary formats in this regard.
10. Procedure for seeking prior approval for change in control of SEBI registered Portfolio Managers
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/IMD- I/DOF1/P/CIR/2021/564 dated May 12, 2021]
On April 26, 2021, SEBI has amended the provision for change in control of SEBI Registered Portfolio Managers making it mandatory for seeking prior approval for change in control. SEBI has, vide this circular, laid down the procedure for seeking such prior approval.
11. Relaxation from compliance to REITs and InvITs due to the CoVID -19 virus pandemic
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/DDHS/ DDHS_Div3/P/CIR/2021/563 dated May 14, 2021]
SEBI extended the due date for regulatory filings andcompliances for InvITs and REITs for the period ending March 31,2021 by 1(one) month over and above the time lines, prescribed under SEBI (Infrastructure Investmen tTrusts)
Regulations,2014 (InvIT Regulations) and SEBI (Real Estate Investment Trusts) Regulations, 2014 (REITRegulations) and circulars issued there under.
CORPORATE LAW
- CIRCULARS
1. Clarification on spending of CSR funds for setting up temporary COVID Care facilities and makeshift hospitals-reg.
[Issued by Ministry of Corporate Affairs vide General Circular No. 05/2021 dated April 22, 2021]
MCA has clarified that spending of CSR funds for ‘setting up of makeshift hospitals and temporary COVID Care facilities’ is a. eligible CSR activity under item nos. (i) and (xii) of Schedule VII of Companies Act, 2013.
2. Relaxation of time for filing certain forms under the Companies Act, 2013.
[Issued by Ministry of Corporate Affairs vide General Circular No. 06/2021dated May 03, 2021]
Form which become due for filing between April 01, 2021 till May 31, 2021 can now be filed with any additional fees till July 31, 2021.
3. Relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013.
[Issued by Ministry of Corporate Affairs vide General Circular No. 07/2021dated May 03, 2021]
This Circular is applicable to form CHG-1 and CHG-9 by a Company or a charge holder, where the date of creation / modification of charge:
- is before 01.04.2021, but the timeline for filing such form has not expired under section 77 of Companies Act, 2013 as on 01.04.2021, or
- falls on any date between 01.04.2021 to 31.05.2021 (both dates inclusive).
In case of point (a) above the no. of days from 01.04.2021 till 31.05.2021 shall not be considered. The first day after 31.05.2021 shall be considered as 01.06.2021.
In case of point (b) the period 115on of charge to 31.05.2021 shall not be considered for counting the no. of days. The first day shall be considered as 01.06.2021.
1. Gap between two board meetings under section 173 of the Companies Act, 2013 (CS- 13) – Clarification – reg.
[Issued by Ministry of Corporate Affairs vide General Circular No. 08/2021 dated May 03, 2021]
MCA has extended the interval of holding board meeting from 120 days to 180 days for quarter April to June 2021 and July to September 2021.
2. Clarification on spending of CSR funds for ‘creating health infrastructure for COVID care’, ‘establishment of medical oxygen generation and storage plants’ etc.
[Issued by Ministry of Corporate Affairs vide General Circular No. 09/2021 dated May 03, 2021]
It is clarified that spending of CSR funds for ‘creatinghealth infrastructure for COVID care’, ‘establishment of medical oxygen generationand storage plants’, ‘manufacturing and supply of Oxygen concentrators, ventilators,cylinders and other medical equipment for countering COVID- 19’ or similar suchactivities are eligible CSR activities under item nos. (i) and (xii) of Schedule VII of theCompanies Act, 2013.
Further, item no. (ix) of Schedule VII of the Companies Act,2013 permits contribution to specified research and development projects aswell as contribution to public funded universities and certain Organisations engagedin conducting research in science, technology, engineering, and medicine as eligibleCSR activities.
MCA has urg e d Companie s including Government companies to undertake the activitiesor projects or programmes using CSR f u n d s , d i r e c t l y b y t h e m s e l v e s o r i n collaborationas shared responsibility with other c o m p a n i e s, su b j e c t t o f u l f i l l m e n t o f Companies(CSR Policy) Rules, 2014 and the guidelines issued by this Ministry from time to time.
3. Clarification on offsetting the excess CSR spent for FY 2019-20
[Issued by Ministry of Corporate Affairs vide General Circular No. 08/2021dated May 03, 2021]
Ministry has clarified that where a company hascontributed any amount to ‘PM CARES Fund’ on 31.03.2020, which is overand above the minimum amount as prescribed under section 135(5) of theCompanies Act, 2013 (“Act”) for FY 2019-20, and such excess amount or partthereof is offset against the requirement to spend under section 135(5) for FY2020-21 in terms of the aforementioned appeal, then the same shall not beviewed as a violation subject to the conditions that:
- the amount offset as such shall have factored the unspent CSR amountfor previous financial years, if any;
- the Chief Financial Officer shall certify that the contribution to “PMCARES Fund”was indeed made on 31st March 2020 in pursuance ofthe appeal and the same shall also be so certified by the statutoryauditor of the company; and
- the details of such contribution shall be disclosed separately in theAnnual Report on CSR as well as in the Board’s Report for FY 2020-21in terms of section 134 (3) (o) of the Act.