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SECURITIES LAW  Only This Much!

SEBI ACT- PENALTIES & APPEALS [Chapter VIA – Sec 15A to 15AJ] ACT PENALTY (in Rs.) Failure to 1 lakh per day Furnish document / return / report to SEBI on OR 1 Crore time; whichever is LESS Redress Investor Grievances; Enter into an agreement by Registered Intermediary. Failure to issue Contract Notes by Broker UPTO 5 times, the amount of Contract Note Charging Excess Brokerage by Broker 1 lakh OR 5 times, the excess Brokerage, whichever is LESS Insider Trading 25 crores OR Deal based on Unpublished Price Sensitive 3 times, the Profits Information (UPSI) made Communicate / counsel based on UPSI whichever is HIGHER Failure with respect to Takeover; Fraudulent & Unfair Trade Practices Contravention of Act / Order & Non-payment Imprison 1 month to 10 of Penalty imposed by Adjudicating officer years & / or UPTO 25 crores Refusal during Investigation, Imprison 1 year & / or UPTO 1 crore  to produce book / document / register; [+] UPTO 5 lakhs per  furnish information; day  personal appearance;  signing notes of examination on Oath Penalties  Credited to Consolidated Fund of India CONSENT ORDER Sec 15T of SEBI Act For administrative / civil proceedings BY SEBI Application @ any stage where probable cause of violation has been found To appropriate sanction, remedy & deterrence WITHOUT resorting to litigation, lengthy proceedings & consequential delays COMPOUNDING Sec 24A of SEBI Act For criminal prosecutions; NOT being an offence punishable with imprisonment only OR imprisonment & fine BY SAT Application before / after institution of proceedings To avoid lengthy process, which would save cost, time, mental, agony, etc…in return for payment of compounding charges

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SECURITIES LAW  Only This Much!

“Application Supported by Blocked amount” [ASBA] an optional way of investing ASBA is a mode of payment for Book-built public issues and rights issue, whereby an application containing an authorization to block the application money in the bank account, for subscribing to an issue is signed by the investor. If an investor is applying through ASBA, his application money shall be debited from the bank account only if his / her application is selected for allotment after the basis of allotment or instruction from Registrars, is finalised. Only “Resident Retail Individual Investor” bidding at Cut-off, and has agreed NOT to revise his / her bid can apply through a bank account maintained with SCSBs. Self certified Syndicate Bank [SCSB] is a bank which is recognized as a bank capable of providing ASBA services to investors. Names of such banks would appear in SEBI website. During the bidding period investors can approach the bank and request for withdrawal through a duly signed letter. After the bid closure period, investor may send withdrawal request to the Registrars, to unblock the application money in the bank account after the finalisation of basis of allotment. GREEN SHOE OPTION an option to buy & resell additional shares in IPO under Book Building route for oversubscribed issues “a post issue price stabilisation mechanism” 1) An option to allot an additional shares UPTO 15% of Issue Size; 2) Stabilising Agent (SA) is appointed in a General Meeting, who is the Merchant Banker (Lead Manager) to the issue, to buy & resell additional shares; SA has to enter into an Agreement with Issuer Company & Promoters and such agreement to be given in Red Herring Prospectus (RHP); disclose Name of SA, Maximum shares to be over allotted, et al. 3) This Stabilisng mechanism is valid ONLY for 30 days AFTER commencement of trading; during the period SA to report on daily basis to Stock Exchange; 4) The process of price stabilisation, Step 1: The 'excess money' from the public UPTO 15% will be collected by Stabilising Agent (SA) & kept in “GSO Bank Account”;

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SECURITIES LAW  Only This Much!

QIP Chapter XIIIA of DIP Issue to QIB only; Mandatory allotment of 10% or more to Mutual Fund The company has to be listed for atleast one year on NSE / BSE as on date of issuance of notice to shareholders Warrants cannot be issued No lock-in BUT off-market transactions restricted for 1 year from allotment No such requirement Appointment of Merchant Banker & filing of Mandatory ‘Placement Document’ with SEBI The aggregate of the proposed placement and all previous placements made in the same FY shall not exceed 5 times the net worth of the issuer as per the audited balance sheet of the previous FY. Allottees to be, 2 or more, if issue size UPTO 250 crores 5 or more, if issue size ABOVE 250 crores Single Allottee allotted UPTO 50% Pricing - Average Weekly [High & Low] closing prices of shares quoted on Stock Exchange during the 2 weeks preceeding 'relevant date' [=date of meeting of Board / Committee when decided to open the proposed issue] Resolution to mention ‘Relevant Date’ CURRENCY = PERIOD; Currency of Resolution = 1 year; Currency of Convertibles = 5 years; Atleast six month gap between two placements made under the authority of same resolution.

Preferential Allotment Chapter XIII of DIP To select group of Investors, including issue to QIB No such requirement

Warrants can be issued Lock-in prescribed as 1 or 3 years Mandatory Auditors Certificate of compliance of Guidelines No such requirement No such requirement / condition

Pricing – as mentioned above; For allot to QIB, only 2 week to be considered, as said, but from ‘relevant date’ [=30 days prior to General Meeting u/s. 81(1A)] Resolution to have prescribed disclosures & identity of allottees Currency of Resolution = 15 days; Currency of Convertibles = 18 months (i.e) WITHIN which, it should take place.

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SECURITIES LAW  Only This Much!

As per Section 21 of Securities Contract Regulation Act, 1956, the conditions of listing is to comply with the CONDITIONS of the listing agreement with the recognized stock exchange, where listed. Violation of listing agreement is an offence punishable with fine UPTO Rs. 1,000/- and further Stock Exchange has right to suspend or withdraw dealings in securities or delist the securities. The Listing Agreement contains 51 clauses and Clause 49 deals with Corporate Governance. Every listed company to maintain Minimum Public Shareholding of 10% or 25%, as the case may be, EXCEPT a company registered with Board for Industrial & Financial Reconstruction (BIFR). CFDS - The term "Corporate Filing and Dissemination System (CFDS)" shall mean the portal at the URL www.corpfiling.co.in which is to enable the companies to file the information electronically like filing Shareholding holding pattern under Clause 35, Quarterly results under Clause 41, Corporate Governance Report under Clause 49, et al and to enable the investors to retrieve the information electronically. It is introduced as pilot basis to top 100 companies of high market capitalization; initially information is filed through Electronic Data Information Filing And Retrieval (EDIFAR). Slowly EDIFAR will be dispensed with. As per Clause 47, to appoint the Company Secretary to act as Compliance Officer of the Listed Company; The Compliance Officer will directly liaise with the authorities such as SEBI, Stock Exchanges, RoC, etc… and investors with respect to implementation of various clauses, rules, regulations and other directives of such authorities and investor service and complaints of related matter; to insist that the Registrar & Share Transfer Agent (RTA) produces a certificate from a Practicing Company Secretary that all transfers have been completed within the stipulated time.

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SECURITIES LAW  Only This Much!

SEBI (INTERMEDIARIES) with effect from 27th May, 2008, in addition to 'relevant regulations' of respective intermediaries registration, obligation & disciplinary proceedings of intermediaries repealing SEBI (Procedure for holding enquiry by Enquiry Officer & imposing penalty) Regulations, 2002 & SEBI (Criteria for Fit & Proper Persons) Regulations, 2004 Intermediaries MEANS PRIMARY 1) Merchant Banker / Lead Manager 2) Registrar & Share Transfer Agent (RTA) 3) Underwriters 4) Bankers to an issue 5) Bankers to an issue 6) Debenture Trustees INCLUDES SECONDARY 7) Stock Brokers 8) Sub-Brokers 9) Portfolio Managers 10)Investment Advisers / Investment Managers OTHERS 11)Depositories 12)Depository Participants (DP) 13)Custodian of Securities 14)Credit Rating Agencies (CRA)

DOES NOT INCLUDE

15)Asset Management Company (AMC) under SEBI Mutual Fund regulations; 16)Clearing Member (CM) of Clearing Corporation / House; 17)Trading Member (TM) of derivative segment of Stock Exchange; 18)Foreign Institutional Investor (FII); 19)Foreign Venture Capital Investor (FVCI); 20)Venture Capital Fund (VCF); Collective Investment Scheme (CIS) & Mutual Fund (MF).

Mutual Fund, set up as TRUST, by SPONSOR MF ORGANS Sponsor Trustees Asset Management Company Custodian.

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Sponsor, to register the MF wit h SEBI & start launc hing schemes, a fter paying ‘Se rvice Fee’

s hold Trustee TY for PROPER efit of the ben lders Unit Ho

d AMC, SEBI registere funds, as MANAGES the e Trustees directed by th

SEBI reg istered Custodia n, holds the SECU RITIES

WINDING UP OF MF SCHEMES Publish in 2 Newspapers, all over India & 1 Vernacular newspaper 1) Open ended scheme, when Total Units outstanding after re-purchase is LESS than Original Issue; 2) Close ended scheme, on expiry of period or happening of an even or as per Board of Directors or 75% of unit holders pass a resolution to wind up. Note, MF has to comply only with 'Fit & Proper' as per Schedule II & 'Action in case of default' as per Chapter V of SEBI (Intermediary) Regulations, 2008. MF has to pay 'Service Fees' WITHIN 15th April of every Financial Year.

COLLECTIVE INVESTMENT

or MF ga s n

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SECURITIES LAW  Only This Much!

under SEBI (CIS) Regulations, 1999 It covers 'plantation schemes' OR 'live stock schemes' or similar schemes, where by, money is pooled from investors for a particular project, say for instance, growing of sandalwood trees, then over the period, when profits started flowing in, it will be distributed among unit holders, just like a mutual fund. In the last decade, there were 'Anubhav Plantations' & many such schemes, but because of the scandals, all such schemes were closed & these regulations were brought in, which is so stringent that hardly any scheme can be floated. 'Collective Investment Schemes'  Conditions – a 'scheme / arrangement',  Contribution / payment – pooled & utilised;  Contribution / payment – with a view to receive profits / income / produce;  Contribution / payment / property – managed on behalf of Investors;  Investors do not have day-to-day control over management & operation.  Exclusions – Scheme / Arrangement by Co-operative Under Co-operative Society Societies Act, 1912 Deposits accepted by Non Banking Under Reserve Bank of India Financial Company (NBFC) Act, 1934 Contract of Insurance Under Insurance Act, 1952 Under Companies Act, 1956 » Sec 58A  Deposits » Deposits by Nidhi / Mutual Benefit Society u/s. 620A Chit Business Under Chit Fund Act, 1982 Subscription to Mutual Fund SEBI (Mutual Fund) Regulations, 1996

INTERNATIONAL CAPITAL

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SECURITIES LAW  Only This Much!

FCEB / FCCB / ADR / GDR to raise capital from overseas investors Under Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt mechanism), 1993 and FEMA Regulations FOREIGN CURRENCY EXCHANGEABLE BOND [FCEB] Bond expressed in freely convertible Foreign Currency Interest and Principal of which is payable in foreign Currency Issued by an Indian Company To overseas Investor who subscribes in foreign Currency Which on a later date can be CONVERTED into Equity shares of Offered Company.  To enable the companies to tap the value of the shareholding in their group companies      Eligibility conditions: 1) Prior approval of RBI to be obtained. 2) Eligibility Conditions for the Offered Company Shall be a Listed Co, engaged in sector eligible to receive FDI; Offered Company is eligible to issue FCCB or ECB. 3) Eligibility Conditions for the Issuer Company Shall form part of the Promoter Group of the Offered Co; Issuer to hold Equity Shares at the time of Issuance of FCEB; Not restrained by SEBI to access securities market. 4) Eligibility Conditions for the Subscriber Entity not prohibited by SEBI from dealing in Securities; Comply with FDI Policy & Sectoral Caps at the time of issue; Prior approval of FIPB obtained, wherever required.

INDIAN DEPOSITORY

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SECURITIES LAW  Only This Much!

to enable Foreign companies to tap Indian capital market and get their DRs listed in Indian Stock Exchanges Under The Companies (Issue of IDR) Rules, 2004 & Chapter VIA of SEBI (DIP) Guidelines, 2000 & Listing Agreement Indian Depository Receipt - MEANS  any instrument in the form of a Depository Receipt (DR)  created by Domestic Depository in India  against the underlying equity shares of foreign issuer. • IDR is denominated in Indian Rupees and traded in Indian SEs • while the underlying shares may be denominated in the currency of the jurisdiction where the issuer is incorporated • dividend till conversion into shares paid in Indian rupees; • After, ONE YEAR of the issue, the IDRs may be converted into underlying shares denominated in foreign currency at the option of the investor subject to compliance with FEMA and the dividend thereafter will be payable in foreign currency. Eligibility criteria for IDR issuers: As per the IDR rules, an IDR issuer should satisfy the following: Pre-issue Capital & Free Of Issuer Co. Atleast USD 50 million Reserves Track Record of Distributable In 3 out of 5 Preceeding Profits Previous Years (PPY) Equity Shares offered In Financial Year UPTO 25% of post issue no. of equity shares Minimum Average Market In its Domestic Atleast USD 100 millions Capitalisation Country during last 3 years Continuous Trading In its Parent Atleast 3 Preceeding Record or History on SE Country Previous Years [3 PPY]

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