Brief Update On Sebi And Corporate Law
SEBI
A. REGULATIONS
- Securities and Exchange Board of India (Research Analysts) (Amendment) Regula- tions, 2021 [Issued by the Securities and Exchange Board of India vide NotificationNo. SEBI/LAD- NRO/GN/2021/09dated March 16, 2021]
SEBI has expanded the scope of list of qualifications and certification requirement. Now a person who has gained a professional qualification by completing a Post Graduate Program in the Securities Market (Research Analysis) from NISM of a duration not less than one year shall also be considered under eligibility criteria.
- Securities and Exchange Board of India (Portfolio Managers) (Amendment) Regula- tions, 2021 [Issued by the Securities and Exchange Board of India vide NotificationNo. SEBI/LAD- NRO/GN/2021/10dated March 16, 2021]
SEBI has now made NISM certification require- ments mandatory for portfolio Managers in addition to the existing minimum qualifications and experience criteria.
- B. Securities and Exchange Board of India (Investment Advisers) (Second Amendment) Regulations,2021 – [Issued by the Securities and Exchange Board of India vide Notification No. SEBI/LAD- NRO/GN/2021/11dated March 16, 2021]
SEBI has expanded the scope of list of qualifications and certification requirement. Now a person who has gained a professional qualification by completing a Post Graduate Program in the Securities Market (Investment Advisory) from NISM of a duration not less than one year shall also be considered under eligibility criteria.
C. CIRCULARS
- Extension of facility for conducting meeting(s) of unitholders of REITs and InvITs through Video Conferencing (VC) or through other audio-visual means (OAVM)
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/ DDHS/DDHS/CIR/P/2021/21dated February 26, 2021]
SEBI has extended the facility to conduct meetings of unitholders, through VC or OAVM for REITs/InvITs, as under:
- Annual meetings of unit holders which becomes due in the calendar year 2021 to be conducted till December 31, 2021; and
- For meetings other than annual meeting of unitholders till June 30, 2021.
2. Circular on Mutual Funds
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/ Df2/ CIR/P/2021/024 dated March 04, 2021]
Based on the amendments carried out to the Mutual fund Regulations, SEBI has issued this circular covering various aspects like gross exposure limits, investment pattern, procedure for change in control of AMC, Go Green Initiatives, filing of AIR by Mutual funds, etc.
- 3. Circular on Guidelines for votes cast by Mutual Funds
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/ IMD/DF4/CIR/P/2021/29 dated March 05, 2021]
With effect from April 01, 2021, SEBI has made it compulsory for Mutual Funds to cast vote of following matter:
- Corporate governance matters, including changes in the state of incorporation. merger and other corporate restructuring, and anti- takeover provisions;
- Changes to capital structure, including increases and decreases of capital and preferred stock issuances;
- Stock option plans and other management compensation issues;
- Social and corporate responsibility issues;
- Appointment and Removal of Directors; and
- Any other issue that may affect the interest of the shareholders in general and interest of the unit- holders in particular; and
- Related party transactions of the investee companies(excluding own group companies).
With effect from April 01, 2022, Mutual funds are compulsorily supposed to vote on matters not listed above.
SEBI has laid down the methodology of voting by Mutual fund managers in this regard.
- 4. Amendments to provisions in SEBI Circular dated September 16, 2016 on Unique Client Code (UCC) and mandatory requirement of Permanent Account Number (PAN)
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/CDMRD/DNP/CIR/P/2021/30 dated March 08, 2021]
Pursuant to the announcement of instant PAN facility in Union Budget 2020, Income Tax Department has launched the facility of e-PAN which is generated instantly through Aadhaar based e-KYC. As such, SEBI has laid down the pointers for requirement of Pan and e-PAN for members of exchanges having commodity derivatives segment and their members dealing in commodity derivatives.
- 5. Rollout of Legal Entity Template
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/MIRSD /DOP/CIR/P/2021/31 dated March 10, 2021]
Forms for Non-Individual i.e. Legal Entity have been released for KYC updating of client KYC on CRKYC portal. These will be effective from April 01, 2021.
- 6. Rollout of Legal Entity Template
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/MIRSD/ DOP/CIR/P/2021/31 dated March 10, 2021]
Forms for Non-Individual i.e. Legal Entity have been released for KYC updating of client KYC on CRKYC portal. These will be effective from April 01, 2021.
- 7. Streamlining the process of IPOs with UPI in ASBA and redressal of investors grievances
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/CFD/ DIL2/CIR/P/2021/2480/1/M dated March 16, 2021]
SEBI has issued this circular to streamline the process of IPO wherein the mode of payment opted is UPI in ASBA. There have been numerous complaints. Hence, with the streamlining of process investors would hopefully be saved of procedural pain and financial loss.
CORPORATE LAW
- Rules
- Companies (Incorporation) Third Amend- ment Rules, 2021 – [Issued by Ministry of Corporate Affairs vide Notification No. G.S.R. 158(E) dated March 05, 2021]
MCA has added the option for Aadhar authentication option in Form INC-35 AGILE- PRO part of SPICe+.
- Companies (Management and Administration) Amendment Rules, 2021 [Issued by Ministry of Corporate Affairs vide Notification No. G.S.R. 159(E) dated March 05, 2021]
The Central Government has notified the provision of Section 32 and 40 of Companies (Amendment) Act, 2020 (29 of 2020) to be effective from March 18, 2021. These section deal remuneration to Independent director even in case the Company has no or inadequate profits.
B. NOTIFICATIONS
- Commencement notification dt 05.03.2021 [Issued by Ministry of Corporate Affairs vide Notification No. 10665(E) dated March 05, 2021]
The Central Government has notified the provision of Section 23(i) of Companies (Amendment) Act, 2017 (1 of 2018) to be effective from March 05, 2021. These section deal remuneration to Independent director even in case the Company has no or inadequate profits.
- Commencement notification dt 05.03.2021 [Issued by Ministry of Corporate Affairs vide Notification No. 1255(E) dated March 18, 2021]
The Central Government has notified the provision of Section 32 and 40 of Companies (Amendment) Act, 2020 (29 of 2020) to be effective from March 18, 2021. These section deal remuneration to Independent director even in case the Company has no or inadequate profits.
- Amendment to Schedule V of the Companies Act, 2013 [Issued by Ministry of Corporate Affairs vide Notification No. 1256(E) dated March 18, 2021]
The Central Government has amended PART II “ REM UN ERATI ON ” o f Sche dule V t o Companies Act, 2013. Reference to “Other Directors’ has been inserted in various clauses. Further, Table (A) has been substituted with the following:
| (1) | (2) | (3) | |
| Sl.No. | Where the effective capital (in rupees) is | Limit of yearly remuneration payable shall not exceed (in Rupess) in case of a managerial person | Limit of yearly remuneration payable shall not exceed (in rupees) in case of other director |
| (i) | Negative or less than 5 crores.than 100 crores. | 60 lakhs | 60 lakhs |
| (ii) | 5 crores and above but less than 100 crores. | 84 lakhs | 84 lakhs |
| (iii) | 100 crores and above but less than 250 crores. | 120 lakhs | 120 lakhs |
| (iv) | 250 crores and above. | 120 lakhs plus 0.01% of the effective capital in excess of Rs.250 crores: | 24 Lakhs plus 0.01% of the effective capital in excess of Rs.250 crores:] |