Brief Update On SEBI AND CORPORATE LAW
SEBI
- REGULATIONS
- Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021
[Issued by the Securities and Exchange Board of India vide NotificationNo. No. SEBI/LAD- NRO/GN/2021-25dated June 10, 2021]
SEBI has repealed the SEBI (Delisting of Equity Shares) Regulations,2009 and has introduced the updated SEBI (Delisting of Equity Shares) Regulations, 2021. The main emphasis is on timeliness and transparency in dissemination of information, completion of delisting procedures and investor protection.
- CIRCULARS
- Enhancement of overall limit for overseas investment by Alternative Investment Funds (AIFs)/Venture Capital Funds (VCFs)
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/DF6/ CIR/P/2021/565dated May 21, 2021]
The overall overseas investment limit of USD 750 million utilized by SEBI registered AIFsand VCFs has been increased to USD 1500 million.
- Format of compliance report on Corporate Governance by Listed Entities
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/CFD/CMD- 2/P/CIR/2021/567dated May 31, 2021]
Companies to which Corporate Governance provisions are applicable are supposed to file compliance reports in specific formats on quarterly basis, at the end of each year and at the end of 6 months from the end of each financial year.
SEBI has now introduced an additional disclosure format to be filed at the end of every half year of a financial year commencing from FY 2021-22 the first of which has to be filed for half year ended September 30, 2021. This disclosure related to the loans/ guarantees/comfort letters/ security providedby the listed entity, directly or indirectly topromoter/ promoter groupentities or any other entity controlled by them.
- 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-a-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/2021/566 dated May 31, 2021]
SEBI had mandated all Mutual Funds/ Asset Management Companies ( AMCs)/ Trustee Companies/Boards of Trustees of Mutual Funds to provide, wef June 01, 2021, disclosures regarding:
- risk- o-meter of the scheme and the benchmark along with the performance disclosure of the schemevis-à-vis bench- mark; and
- detailsofportfolio.
This disclosure requirement shall now be effective from September 01, 2021.
- Circular on Relaxation in compliance with requirements pertaining to AIFs and VCFs.
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/IMD- I/DOF6/CIR/2021/568 dated May 31, 2021]
Theduedates for regulatory filings by AIFs and VCFs which are due between the period ending March 2021 to July 2021 as prescribed under SEB I ( A l t e r n a t i v e I n v e s t m e n t Fu n d s ) Regulations, 2012 and circulars issued there under are extended till September 30, 2021.
- ‘Off-market’ transfer of securities by FPI
[Issued by the Securities and Exchange Board of India vide Circulars No. SEBI/HO/FPI&C/ P/CIR/2021/0569dated June 01, 2021]
The Finance Act, 2021 provides tax incentives for relocating foreign funds to International Financial Services Centre (IFSC) in order to make the IFSCin GIFT City a global financial hub. In order to facilitate such ‘relocation’ FPIs are requested to approach SEBI through their ‘Domestic Depository Participants’ (DDPs) for approval. This will also involve transfer of securities from existing DDPs to participant for special purpose vehicle in Gift city. The ‘off- market’ transfer shallbe allowed without prejudice to any provisions of tax laws and FEMA.
- 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
/P/CIR/2021/570 dated June 02, 2021]
SEBI had put in place measures to have a uniform policy to further streamline the processing of ASBA applications through UPI process among intermediaries/SCSBs (Self-Certified Syndicate Banks) and also provided a mechanism of compensation to investors.
In this regard it has relaxed compliance with certain provisions such as:
- information on SMS regarding the details of total number of shares applied/allotted/non- allotted etc.;
- Uploading information on closed user group; and
- Completion of unblocks ofASBA on T + 4 day.
- Centralized Database for Corporate Bonds/ Debentures
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/DDHS
/DDHS1/P/CIR/2021/572 dated June 04, 2021]
In order to further streamline the Centralized Database for Corporate Bonds/ Debentures and to provide further ease of access to investors, SEBI has updated the list of data fields to be maintained in the database along with the manner of filing the same. As such Depositories, Bond / Debenture Issuers, Stock Exchanges, Credit Rating Agencies and Debenture Trustees are required to undertake necessary filings as per the updated data field list so prescribed.
- Circular on Potential Risk Class Matrix for debt schemes based on Interest Rate Risk and Credit Risk
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/573 dated June 07, 2021]
With effect from December 01, 2021, Mutual funds will have to categorize debt scheme based on the Potential Risk Class Matrix for debt schemes which is turn based on Interest Rate Risk and Credit Risk. The parameters are based on maximum interest rate risk (measured by Macaulay Duration (MD) of the scheme) and maximum credit risk (measured by Credit Risk Value (CRV) of the scheme). SEBI has laid down the detailed process and procedures in this Circular.
- Revised Framework for Regulatory Sandbox
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/ITD/ ITD/CIR/P/2021/575 dated June 14, 2021]
The Objective of the Regulatory Sandbox is, “To grant certain facilities and flexibilities to the entitiesregulatedbySEBIsothattheycanexperime ntwith FinTech solutionsinalive environment and on limited set of real users for a limited time frame.”
- Revised Framework for Regulatory Sandbox
[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. SEBI has, in order to enhance the reach and achieve the desired aim, revised the eligibility criteria of the Regulatory Sandbox.
- Relaxation from the requirement of minimum vesting period in case of death of employee(s) under SEBI (Share Based Employee Benefit)
Regulations, 2014
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/CFD/DCR2
/CIR/P/2021/576 dated June 15, 2021]
In case of employee stock options and special appreciation rights, there is a minimum vesting period of 1(one) year as per the SEBI (Share Based EmployeeBenefit) Regulations, 2014. Further, in case of death of an employee while in employment, normally the benefits accrue to the deceased person’s family only on completion of the vesting period.
However, in view of the Covid-19 pandemic and the hardships faced by the families of the deceased persons, SEBI has relaxed this requirement of 1(one) year. Now the benefits will accrue on immediate basis to the families of the persons who have deceased on or after April 01, 2020.
- Settlement of Running Account of Client’s Funds lying with Trading Member (TM)
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/MIRSD/ DOP/P/CIR/2021/577 dated June 16, 2021]
SEBI has prescribed the revised procedure for the manner in which Brokers are supposed to undertake client’s fund settlement after considering factors like pay-in obligations and margin obligations.
- Automation of Continual Disclosures under Regulation 7(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015 – System Driven Disclosures for inclusion of listed Debt Securities
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/ISD/ISD/ CIR/P/2021/578 dated June 16, 2021]
Pursuant to this Circular, now with effect from July 01, 2021, even debt securities of equity listed Companies will be covered and disclosed under the Sy stem Driv en Disclosures mechanism implemented by SEBI.
- Framework for administration and supervis- ion of Investment Advisers under the SEBI (Investment Advisers) Regulations, 2013
[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/IMD- I/DOF1/P/CIR/2021/579 dated June 18, 2021]
Through the powers entrusted under Regulation 14 of SEBI (Investment Advisers) Regulations, 2013, SEBI has authorised BSE subsidiary BSE ‘Administration & Supervision Limited’ (BASL) as the “Investment Adviser Administration and Supervisory Body”(“IAASB”). As such, BASL has been entrusted with the administration and supervision of Investment Advisers. SEBI has also released an FAQ in this regard.
As such, all existing IAs have to become membership of IAASB with 3 months of recognition and also undertake all reporting to such supervising IAASB.
All new applications for registration will now be routed to the recognised IAASB.
CORPORATE LAW
A. NOTIFICATIONS
- Companies (Incorporation) Fourth Amend- ment Rules, 2021
[Issued by Ministry of Corporate Affairs vide Notification No. G.S.R. …(E) dated June 07, 2021]
MCA has amended the AGILE-PRO form to AGILE-PRO-S by adding a field for Shops and Establishment Registration.
- Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2021
[Issued by Ministry of Corporate Affairs vide Notification No. G.S.R. 396 (E) dated June 09, 2021]
The Central Government has inserted new rule 6A after Rule 6. This rule deals with the manner in which the shares have to be transferred to the Investor Education and Protection Fund Authority and the manner of dealing with the benefits accruing to such transferred shares.
- Companies (Meetings of Board and its Powers)
Amendment Rules, 2021
[Issued by Ministry of Corporate Affairs vide Notification No. G.S.R. 409 (E) dated June 15, 2021]
MCA has deleted Rule 4 of Companies (Meetings of Board and its Powers) Rules, 2014 relating to “Matters Not to be Dealt with in a Meeting Through Video Conferencing or Other Audio- Visual Means”. As a result, now the following items are permitted to be dealt with through in a meeting held through Video Conferencing or Other Audio-Visual Means:
- the approval of the annual financial statements;
- the approval of the Board’s report;
- the approval of the prospectus;the Audit Committee Meetings for 2[consideration of financial statement including consolidated financial statement if any, to be approved by the board under sub-section (1) of section 134 of the Act]; and
- the approval of the matter relating to amalgamation, merger, demerger, acquisi- tion and takeover.