With a view to promoting the ease of reporting of transactions under foreign direct investment, the Reserve Bank of India (RBI), under the aegis of the e-Biz project of the Government of India has enabled online filing of the Foreign Currency Transfer of Shares (FCTRS) returns for reporting transfer of shares, convertible debentures, partly paid shares and warrants from a person resident in India to a person resident outside India or vice versa.

IRDA: issues Master Circular on Insurance Advertisements.

The guidelines have been issued with the intention of protecting the interest of the insuring public, enhance their level of confidence on the nature of sales material used and ultimately encourage fair business practices. They are to be considered as the minimum standards to be adhered to, in addition to compliance with the IRDA (Insurance Advertisements and Disclosure) Regulations, 2000 and the code of conduct prescribed by the Advertisement Standards Council.

CBDT: Notifies procedure for financial institutions to file information under Foreign Account Tax Compliance Act  FATCA)

The Central Board of Direct Taxes (CBDT) has notified the procedure for financial institutions to register and submit information under the Foreign Account Tax Compliance Act (FATCA), under which the US and India would get automatic exchange of information on tax evaders from September 30. The procedure says the reporting financial institutions will have to register with the Income-Tax department by logging in to e-filing site with log-in ID used to

file online returns in general. SEBI: SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2015. In the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, in regulation 1, in sub-regulation (3), the proviso shall be substituted by the following, namely:- "Provided that these regulations shall not apply to direct and indirect acquisition of shares or voting rights in, or control over a company listed without making a public issue, on the institutional trading platform of a recognised stock exchange."

CBDT: signs Advance Pricing Agreements (APAS) to usher in certainty in Taxation.

As a part of a major initiative to usher in certainty in taxation, the Central Board of Direct Taxes (CBDT) entered into two unilateral Advance Pricing Agreements (APAs) on 3 August, 2015 with two Multi-National Companies (MNCs) which includes the first APA with a “Rollback” provision. With this, the CBDT has so far signed 14 APAs of which 13 are unilateral APAs and one is a bilateral APA. The 14 APAs signed relate to various sectors like  elecommunication, oil exploration, pharmaceuticals, finance/banking, software development services and ITeS (BPOs). APAs settle transfer prices and the methods of setting prices of international transactions in advance. Unilateral APAs are agreed between Indian taxpayers and the CBDT, without involvement of the tax authorities

of the country where the associated enterprise is based. Bilateral APAs include agreements between the tax authorities of the two countries. An APA with the “Rollback” provision extends tax certainty for nine financial years as against five years in APAs without!“Rollback”.! SEBI: SEBI (Alternative Investment Funds) (Amendment)

Regulations, 2015 A new Regulation 15(1)(h) has been inserted through which the investments made by Category I and Category II Alternative Investment Funds in the shares of entities listed on the institutional trading platform have been deemed to be investment in "Unlisted Securities" for the purpose of these regulations.

SEBI: SEBI (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2015.

SEBI has issued the SEBI (ICDR) (Third Amendment) Regulations, 2015 dated 11th August, 2015, which will provide all listed companies a ‘fast-track’ route for share sales. As per the new norms, firms in which public shareholders own stocks worth Rs 1,000 crore will now be able to access this route through a Follow-on Public Offer (FPO). Currently, the minimum requirement is Rs 3,000 crore. The minimum public holding requirement for a rights offer is Rs 250 crore. The listed companies can tap the ‘fast-track’ route even without complying to this minimum average market value limit, provided they meet other! conditions. Under the ‘fast-track’ route, a listed

company would not be required! to file any! draft offer document for its FPO or rights issue and they can proceed with fund-raising programme without necessarily! getting!‘observations’!from!SEBI.! This new route would also give a boost to the government’s disinvestment drive. Securities and Exchange Board of India (SEBI) said that in the case of rights issues, promoters will not renounce their rights, except to the extent of renunciations within the promoter group, or for the purposes of complying with minimum public shareholding norms.! 

SEBI: SEBI (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2015.

Chapter XC has been substituted as namely ‘Listing on Institutional Trading Platform’. These new provisions are applicable to companies engaged in the Information Technology, Nanotechnology, Biotechnology, Data Analytics etc., and also other entities, subject to compliance of certain pre requisites. Under the new norms, such companies can get listed on a separate platform of stock exchanges known as Institutional Trading Platform (ITP), with the option of either coming out with a Public Issue or without coming out with a Public Issue. The norms provide for the option of migration to the main Board after a period of 3 years (subject to the company complying with the listing

conditions of the main Board). The norms also provide for simplified exit process from the ITP. ITP shall be accessible to both Institutional as!well!as!Non-institutional investors. Institutional investor means QIBs, family trusts,  systematically important NBFCs, all with Net-worth of Rs 500 crore or more. The Norms mandate that for companies engaged in IT related activities, at least 25% of the pre issue capital should be held by QIBs, while for others, at least 50% of their pre issue capital is held by QIBs. It is further provided that no person acting individually or with persons acting in concert shall hold 25 % or more of post- issue capital in the entities specified above. Entire pre-issue capital of shareholders shall be locked in for a period of 6 months. Minimum trading lot shall be Rs 10 lakh. 

SEBI: SEBI (Issue of Capital and Disclosure Requirements) (Fifth Amendment) Regulations, 2015.

In the amended regulations it is mandated that in all public issues, the issuer shall accept bids using only ASBA facility in the manner specified by the Board. In rights issues, where not more than one payment option is given, the issuer shall provide the facility of ASBA in accordance with the procedure and eligibility criteria specified by the Board. In case of qualified institutional buyers and non-institutional investors, the issuer shall accept bids using ASBA facility only.

RBI: Streamlining the flow of credit to MSEs for facilitating adequate and timely credit flow during their ‘Life Cycle’.

RBI with an intent to Streamlining flow of credit to Micro and Small Enterprises (MSEs) for facilitating timely and adequate credit flow during their ‘Life Cycle’ has advised the Banks to put in place Board approved policy on lending to MSEs, adopting an appropriate system of timely and adequate credit delivery to borrowers in the MSE segment within the broad prudential regulations of Reserve Bank of India. Micro and small units are more prone to facing financial difficulties during their Life Cycle than large enterprises/corporates when the business conditions turn adverse. Absence of timely support at such a juncture could lead to the unit turning sick and many a time irreversibly. As such, role of banks in providing continuous support to viable MSEs during such phases of transient financial difficulties assumes significance. Banks are further, advised to ensure that their lending policies for MSEs are streamlined and made flexible in order to empower the officials concerned to take quick decisions on credit delivery to MSEs.

SEBI: releases FAQs on Delisting of Securities.

1. What is meant by delisting of securities?

The term “delisting” of securities means permanent removal of securities of a listed company from a stock exchange. As a consequence of delisting, the securities of that company would no longer be traded at that stock exchange.

2. What is the difference between voluntary delisting and compulsory delisting?

Compulsory delisting refers to permanent removal of securities of a listed company from a stock exchange as a

penalizing measure at the behest of the stock exchange for not making submissions/comply with various requirements set out in the Listing agreement within the time frames prescribed. In voluntary delisting, a listed company decides on its own to permanently remove its securities from a stock exchange.

3. What is the exit opportunity available for investors in case a company gets delisted?

SEBI (Delisting of Securities) Guidelines, 2003 provide an exit mechanism, whereby the exit price for voluntary delisting of securities is determined by the promoter of the concerned company which desires to get delisted, in accordance to book building process. The offer price has a floor price, which is average of 26 weeks average of traded price quoted on the stock exchange where the shares of the company are most frequently traded preceding 26 weeks from the date public announcement is made. There is no ceiling on the maximum price. In case of infrequently traded securities, the offer price is as per Regulation 20 (5) of SEBI (Substantial Acquisition and Takeover) Regulations. For this purpose, infrequently traded securities are determined in the manner as provided in Regulation 20 (5) of SEBI (Substantial Acquisition and Takeover) Regulations.

4. Does a company listed at BSE/NSE have to provide exit offer to shareholders in case it delists from stock exchanges other than BSE and NSE?

No, the company does not have to provide exit offer to shareholders because it continues to be listed on the BSE /

NSE which have nationwide reach and shareholders can exit any time they decide to so by way of selling shares in NSE/BSE.

SEBI: Guidance Note on SEBI (Prohibition of Insider Trading) Regulations, 2015.-

1. Exercise of ESOPs shall not be considered to be “trading” except for the purposes of Chapter III of the Regulations. However, other provisions of the Regulations shall apply to the sale of shares so acquired.

2. Any derivative contract that is cash settled on expiry shall be considered to be a contra trade. Trading in index futures or such other derivatives where the scrip is part of such derivatives need not be reported.

3. Any trading opted by a person under Trading Plan can be done only to the extent and in the manner disclosed in the plan, save and except for pledging of securities.

4. Buy back offers, open offers, rights issues, FPOs, bonus, etc. of a listed company are available to designated persons also, and restriction of ‘contra-trade’ shall not apply in respect of such matters.

5. The code prescribed by the Regulations is same for listed companies, market intermediaries and other persons

who are required to handle UPSI in the course of business operations. Therefore, restrictions with regard to contra trade forming part of clause 10 of code of conduct shall apply to all according to the Regulations.

6. Creation of pledge or invocation of pledge is allowed when trading window is closed However, the pledger or

pledgee may demonstrate that the creation of pledge or invocation of pledge was bona fide and prove their innocence under proviso to sub-regulation (1) of regulation 4 of the Regulations.

7. For the purpose of calculation of threshold for disclosures relating to pledge under Chapter III of the

Regulations, the market value on the date of pledge/revoke transaction should be considered.

8. The board of directors of the company shall be the approving authority for trades done by the Compliance Officer or his immediate relative as Insiders and the Board may stipulate such procedures as are deemed necessary to ensure compliance with these regulations.

9. In case of a group, separate code may be adopted for listed company and each of intermediaries, as applicable to the concerned entity.

10. Regulation 2 (c) clearly provides the functions and responsibilities of the compliance officer. Specific responsibilities to deal with dissemination of information and disclosure of unpublished price sensitive information are given to Chief Investor Relations Officer (CIRO) under clause 3 of Schedule A. It is company’s discretion to designate two separate persons as CIRO and Compliance Officer, respectively for fulfilling specified responsibilities. In cases where both CIRO and CO have been designated for overlapping functions, they shall be jointly and severally responsible.

11. A spouse is presumed to be an ‘immediate relative’, unless rebutted so.

If you have any comments or queries please reach out to: gkhaitan@opkhaitan.com / ssachar@opkhaitan.com