Post on 12-Dec-2021
transcript
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 1
SECURITIES LAWS AMENDMENTS FOR CS - DECEMBER 2020 EXAMS
INTERMEDIARIES
DEBENTURE TRUSTEE
Capital Adequacy Requirement. (Increased From 2 Crore to 10 Crore)
Regulation -7A.
The capital adequacy requirement referred to in clause (g) of regulation 6 shall not be less than
the net worth of 10 crore rupees:
Provided that a debenture trustee holding certificate of registration as on 7-5-2019 shall fulfil the
net worth requirements within three years from the date of such commencement.
PORTFOLIO MANAGER
(new regulations)
Securities And Exchange Board Of India (Portfolio Managers) Regulations, 2020
“PORTFOLIO” Regulation 2(1)(n) means
the total holdings of securities and goods belonging to any person;
“PORTFOLIO MANAGER” Regulation 2(1)(o)
means a body corporate, which pursuant to a contract with a client,
advises or directs or undertakes on behalf of the client (whether as a discretionary
portfolio manager or otherwise) the management or administration of a portfolio of
securities or goods or funds of the client, as the case may be:
Provided that the Portfolio Manager may deal in goods received in delivery against physical
settlement of commodity derivatives.
―DISCRETIONARY PORTFOLIO MANAGER‖ Regulation 2(1)(g)
means a portfolio manager who under a contract relating to portfolio management,
exercises or may exercise, any degree of discretion as to the investment of funds or
management of the portfolio of securities of the client, as the case may be;
Registration
An application by a portfolio manager for grant of the certificate shall be made to SEBI in the
prescribed form-A shall be accompanies by a non-refundable application fee.
Following requirements to be satisfied by the applicant for getting the certificate of registration as
mentioned in SEBI Regulation are as follows:
(a) Portfolio manager must have capital adequacy requirement of not less than net worth of 5
crore rupees.
(b) the applicant is a body corporate,
(c) the applicant has the necessary infrastructure like adequate office space, equipments and
the manpower to effectively discharge the activities of a portfolio manager,
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 2
(d) the principal officer of the applicant
(i) has the professional qualifications in finance, law, accountancy or business
management from an institution recognised by the Government or a foreign university or
(ii) an experience of at least 5 years in related activities in the securities market including in a
portfolio manager, stock broker investment advisor, research analyst or as a fund
manager: and
(iii) the relevant NISM certification as specified by the Board from time to time.
Provided that at least 2 years of relevant experience is in portfolio management or
investment advisory services or in the areas related to fund management.
(e) In addition to the Principal Officer and Compliance Officer, the applicant has in its
employment at least one person with the following qualifications:-
(i) graduation from a university or an institution recognized by the Central Government or
any State Government or a foreign university; and
(ii) an experience of at least two years in related activities in the securities market
including in a portfolio manager, stock broker, investment advisor or as a fund manager:
(f) any disciplinary action has been taken by the Board against a person directly or
indirectly connected with the applicant under the Act or the rules or the regulations made
thereunder;
(g) the applicant, its director, principal officer or the employee as specified in Clause (d) has at
any time been convicted for any offence involving moral turpitude or has been found guilty
of any economic offence
(h) the applicant is a fit and proper person.
Code Of Conduct- Portfolio Manager
1. A portfolio manager shall, in the conduct of his business, observe high standards of
integrity and fairness in all his dealings with his clients and other portfolio managers.
2. The money received by a portfolio manager from a client for an investment purpose should
be
deployed by the portfolio manager as soon as possible for that purpose and
money due and payable to a client should be paid forthwith.
3. A portfolio manager
shall render at all times high standards of service, exercise due diligence, ensure
proper care and exercise independent professional judgment.
The portfolio manager shall
either avoid any conflict of interest in his investment or disinvestment decision, or
Where any conflict of interest arises, ensure fair treatment to all his customers.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 3
It shall disclose to the clients, possible source of conflict of interest, while providing
unbiased services. A portfolio manager shall not place his interest above those of his
clients.
4. A portfolio manager shall not execute any trade against the interest of the clients in its
proprietary account (in his personal account).
5. A portfolio manager shall not
make any statement or indulge in any act, practice or unfair competition, which is
likely to be harmful to the interests of other portfolio managers or
is likely to place such other portfolio managers in a disadvantageous position in relation to
the portfolio manager himself, while competing for or executing any assignment.
6. A portfolio manager shall not make any exaggerated statement, whether oral or written, to
the client either about the qualification or the capability to render certain services or his
achievements in regard to services rendered to other clients.
7. At the time of entering into a contract, the portfolio manager shall obtain in writing from the
client, his interest in various corporate bodies which enables him to obtain unpublished
price-sensitive information of the body corporate.
8. A portfolio manager shall not disclose to any clients, or press any confidential
information about his client, which has come to his knowledge.
9. The portfolio manager shall where necessary and in the interest of the client take adequate
steps for the transfer of the clients' securities and for claiming and receiving dividends,
interest payments and other rights accruing to the client. It shall also take necessary action for
conversion of securities and subscription for/renunciation of rights in accordance with the
clients' instruction.
10. A portfolio manager shall endeavor to –
(a) ensure that the investors are provided with true and adequate information without
making any misguiding or exaggerated claims and are made aware of attendant risks
before any investment decision is taken by them;
(b) Render the best possible advice to the client having regard to the client's needs and
the environment, and his own professional skills;
(c) Ensure that all professional dealings are affected in a prompt, efficient and cost
effective manner.
11. (1) A portfolio manager shall not be a party to –
(a) creation of false market in securities;
(b) price rigging or manipulation of securities;
(c) passing of price sensitive information to brokers, members of the recognized
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 4
stock exchanges and any other intermediaries in the capital market or take any other
action which is prejudicial to the interest of the investors.
(2) No portfolio manager or any of its directors, partners or manager shall either on
their own or through their associates or family members or relatives enter into any
transaction in securities of companies on the basis of unpublished price sensitive
information obtained by them during the course of any professional assignment.
12.
(a) A portfolio manager or any of its employees shall not render, directly or indirectly any
investment advice about any security in the publicly accessible media, whether
real-time or non-real-time, unless a disclosure of his long or short position in the said
security has been made, while rendering such advice.
(b) In case an employee of the portfolio manager is rendering such advice, he shall also
disclose the interest of his dependent family members and the employer including
their long or short position in the said security, while rendering such advice.
13.
(a) The portfolio manager shall abide by the Act, Rules, and regulations made thereunder
and the Guidelines / Schemes issued by the Board.
(b) The portfolio manager shall comply with the code of conduct specified in the SEBI
(Prohibition of Insider Trading) Regulations, 2015.
(c) The portfolio manager shall not use his status as any other registered intermediary to
unduly influence the investment decision of the clients while rendering portfolio
management services.
SEBI (INVESTMENT ADVISERS) REGULATIONS, 2013
Capital Adequacy (Net worth requirements increased)
(1) Body Corporate
Investment advisers which are body corporate shall have a
net worth of not less than 50 lakh rupees.
(2) Individuals
Investment advisers who are individuals or partnership firms shall have
net tangible assets of value not less than rupees 5 lakh.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 5
SEBI ACT, 1992
Penalty for failure to redress investors‟ grievances
Section - 15C. (new insertion)
If any listed company or any person who is registered as an intermediary, after having been called
upon by the Board in writing including by any means of electronic communication, to
redress the grievances of investors, fails to redress such grievances within the time specified by
the Board, such company or intermediary shall be liable to a penalty which shall
not be less than one lakh rupees
but which may extend to one lakh rupees for each day during which such failure
continues
subject to a maximum of one crore rupees
Penalty for default in case of stock brokers.
Section – 15F.
If any person, who is registered as a stock broker under this Act,—
(a) fails to issue contract notes in the form and manner specified by the stock exchange of which
such broker is a member, he shall be liable to a penalty
which shall not be less than 1 lakh rupees
but which may extend to 1 crore rupees for which the contract note was required
to be issued by that broker;
(Earlier upto amount of contract note)
Penalty on, Destruction, Etc., Of Records And Failure
To Protect The Electronic Database Of Board.
Section 15 HAA (New Section Inserted)
Any person, who —
(a) knowingly alters, destroys, mutilates, conceals, falsifies, or makes a false entry
in any information, record, document (including electronic records), which is required
under this Act or any rules or regulations made thereunder,
so as to impede, obstruct, or influence the investigation, inquiry, audit, inspection or
proper administration of any matter within the jurisdiction of the Board.
Explanation.—For the purposes of this clause, a person shall be deemed to have altered,
concealed or destroyed such information, record or document, in case he knowingly fails to
immediately report the matter to the Board or fails to preserve the same till such
information continues to be relevant to any investigation, inquiry, audit, inspection or
proceeding, which may be initiated by the Board and conclusion thereof;
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 6
(b) without being authorised to do so, access or tries to access, or denies of access or
modifies access parameters, to the regulatory data in the database;
(c) without being authorised to do so, downloads, extracts, copies, or reproduces in any form the
regulatory data maintained in the system database;
(d) knowingly introduces any computer virus or other computer contaminant into the
system database and brings out a trading halt;
(e) without authorisation disrupts the functioning of system database;
(f) knowingly damages, destroys, deletes, alters, diminishes in value or utility, or affects by
any means, the regulatory data in the system database; or
(g) knowingly provides any assistance to or causes any other person to do any of the acts
specified in clauses (a) to (f),
☛ shall be liable to a penalty which shall
not be less than one lakh rupees
but which may extend to 10 crore rupees or
three times the amount of profits made out of such act,
Whichever is higher.
Explanation.—In this section, the expressions "computer contaminant", "computer virus"
and "damage" shall have the meanings respectively assigned to them under section 43 of
the Information Technology Act, 2000.
ALTERNATIVE INVESTMENT FUND (AIF)
New section inserted
Exemption from enforcement of the regulations in special cases.
REGULATION-35A.
(1) The Board may, exempt any person or class of persons from the operation of all or any of
the provisions of these regulations for a period as may be specified but not exceeding
twelve months, for furthering innovation in technological aspects relating to
testing new products, processes, services, business models, etc. in live environment of
regulatory sandbox in the securities markets.
(2) Any exemption granted by the Board under sub-regulation (1) shall be subject to
the applicant satisfying such conditions as may be specified by the Board including
conditions to be complied with on a continuous basis.
Explanation. —
For the purposes of these regulations, "regulatory sandbox" means a live testing
environment where new products, processes, services, business models, etc. maybe deployed
on a limited set of eligible customers for a specified period of time, for furthering innovation in
the securities market, subject to such conditions as may be specified by the Board.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 7
COLLECTIVE INVESTMENT SCHEME (CIS)
New section inserted
Exemption from enforcement of the regulations in special cases.
Regulation 74B
(1) The Board may, exempt any person or class of persons from the operation of all or any of
the provisions of these regulations for a period as may be specified but not exceeding
twelve months, for furthering innovation in technological aspects relating to
testing new products, processes, services, business models, etc. in live environment of
regulatory sandbox in the securities markets.
(2) Any exemption granted by the Board under sub-regulation (1) shall be subject to the
applicant satisfying such conditions as may be specified by the Board including conditions to
be complied with on a continuous basis.
Explanation. —
For the purposes of these regulations, "regulatory sandbox" means alive testing environment
where new products, processes, services, business models, etc. maybe deployed on a limited
set of eligible customers for a specified period of time, for furthering innovation in the
securities market, subject to such conditions as may be specified by the Board.
SWEAT EQUITY
Exemption from enforcement of the regulations in special cases.
Regulation - 21.
(1) The Board may, exempt any person or class of persons from the operation of all or any of the
provisions of these regulations for a period as may be specified but not exceeding twelve
months, for furthering innovation in technological aspects relating to testing new products,
processes, services, business models, etc. in live environment of regulatory sandbox in the
securities markets.
(2) Any exemption granted by the Board under sub-regulation (1) shall be subject to the
applicant satisfying such conditions as may be specified by the Board including
conditions to be complied with on a continuous basis.
Explanation. —
For the purposes of these regulations, "regulatory sandbox" means a live testing environment
where new products, processes, services, business models, etc. may be deployed on a limited
set of eligible customers for a specified period of time, for furthering innovation in the
securities market, subject to such conditions as may be
specified by the Board.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 8
BUY - BACK
CONDITIONS AND REQUIREMENTS
FOR BUY-BACK OF SHARES AND SPECIFIED SECURITIES
Regulation - 4.
(i) The maximum limit of any buy-back shall be twenty-five per cent or less of the aggregate
of paid-up capital and free reserves of the company, (new insertion) based on both
standalone and consolidated financial statements of the company.
Explanation: In respect of the buy-back of equity shares in any financial year, the
reference to twenty-five per cent in this regulation shall be construed with respect to its
total paid-up equity capital in that financial year.
(Sub- Regulation completely changed)
(ii) The ratio of the aggregate of secured and unsecured debts owed by the company to
the paid-up capital and free reserves after buy-back shall,-
(a) be less than or equal to 2:1, based on both standalone and consolidated
financial statements of the company:
Provided that if a higher ratio of the debt to capital and free reserves for the
company has been notified under the Companies Act, 2013, the same shall prevail; OR
(b) be less than or equal to 2:1, based on both standalone and consolidated
financial statements of the company, after excluding financial statements of all
subsidiaries
that are non-banking financial companies and housing finance companies
regulated by RBI or National Housing Bank, as the case may be
Provided that buy-back of securities
shall be permitted only if all such excluded subsidiaries have their ratio
of aggregate of secured and unsecured debts to the paid-up capital and free
reserves of not more than 6:1 on standalone basis.
Previous Regulation
(ii) The ratio of the aggregate of secured and unsecured debts owed by the company
after Buy back shall not be more than twice the paid up capital and free reserves.
(iii) All shares or other specified securities for buy-back shall be fully paid-up.
(iv) A company may buy-back its shares or other specified securities by any one of the
following methods:
(a) from the existing shareholders or other specified securities holders on a proportionate
basis through the tender offer;
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 9
(b) from the open market through—
(i) book-building process,
(ii) stock exchange;
(c) from odd-lot holders:
Provided that the buyback from open market
shall be less than 15% of the paid up capital and free reserves of the
company, based on both standalone and consolidated financial statements of
the company. (new insertion)
Previous Regulation
Provided that no offer of buy back for fifteen per cent or more of the paid up
capital and free reserves of the company shall be made from the open market.”
General compliance and filing requirements for buy-back:
Reg. 5.(i)
The company shall not authorise any buy-back (whether by way of tender offer or from open
market or odd lot) unless:
(a) The buy-back is authorised by the company's articles;
(b) A special resolution has been passed at a general meeting of the company authorising
the buy-back:
Provided that nothing contained in this clause shall apply to a case where the buy-back is, ten per
cent or less of the total paid-up equity capital and free reserves of the company based on both
standalone and consolidated financial statements of the company; andsuch buy-back has
been authorised by the board of directors by means of a resolution passed at its meeting.
Regulation – 25A (new Regulation)
Exemption from enforcement of the regulations in special cases.
EMPLOYEE STOCK OPTION PLAN (ESOP)
Regulation – 27A (new Regulation)
Exemption from enforcement of the regulations in special cases.
FOREIGN PORTFOLIO INVESTORS (FPI)
Categories of foreign portfolio investors REGULATION – 5
An applicant seeking registration as a foreign portfolio investor may apply in one of the
categories mentioned hereunder or any other category as may be specified by the Board from
time to time –
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 10
(a) "Category I foreign portfolio investor" which shall include –
(i) Government and Government related investors such as central banks, sovereign wealth
funds, international or multilateral organizations or agencies including entities controlled
or at least 75% directly or indirectly owned by such Government and Government
related investor(s);
(ii) Pension funds and university funds;
(iii) Appropriately regulated entities such as insurance or re insurance entities, banks, asset
management companies, investment managers, investment advisors, portfolio
managers, broker dealers and swap dealers;
(iv) Entities from the Financial Action Task Force member countries, or from any
country specified by the Central Government by an order or by way of an
agreement or treaty with other sovereign Governments, which are –
I. appropriately regulated funds;
II. unregulated funds whose investment manager is appropriately regulated and
registered as a Category I foreign portfolio investor:
Provided that the investment manager undertakes the responsibility of all the acts
of commission or omission of such unregulated fund;
III. university related endowments of such universities that have been in existence
for more than five year.
ISSUE OF SECURITIES SEBI (ICDR)2018
Reference Date REGULATION – 4
Unless otherwise provided in this Chapter, an issuer making an initial public offer of specified
securities shall satisfy the conditions of this Chapter as on the date of filing of the draft offer
document with the Board and also as on the date of filing (earlier was registering) the offer
document with the Registrar of Companies.
ASBA
(In Right Issue) Replaced
Regulation - 76
An applicant to the rights issue shall do so only through the ASBA facility, which facility shall
be provided by the issuer in the manner specified by the Board:
Provided that payment through any other electronic banking mode shall be permitted in
respect of an application made for any reserved portion outside the issue period.
Previous The issuer shall provide the ASBA facility in the manner specified by the Board where not more
than one payment option is provided.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 11
Provided that the applicants in a rights issue shall be eligible to make applications through
ASBA facility only if such applicant:
(i) is holding equity shares in dematerialised mode;
(ii) has not renounced entitlement in part or in full; and
(iii) is not a renouncee. Provided further that payment made for application for any
reserved portion outside the issue period can be through electronic banking modes.”
CREDIT OF RIGHTS ENTITLEMENTS AND ALLOTMENT OF SPECIFIED SECURITIES
Regulation - 77A (new insertion)
(1) The rights entitlements shall be credited to the demat account of the shareholders
before the date of opening of the issue.
(2) Allotment of specified securities shall be made in the dematerialized form only.
PAYMENT OPTIONS
Regulation - 88
The issuer shall give one of the following payment options to all the shareholders for each type of
instrument:
(a) Part payment on application with balance money to be paid in calls; or
(b) Full payment on application:
Provided that the part payment, if any, on application shall not be less than 25% of the issue
price and such issuer shall obtain the necessary regulatory approvals to facilitate the same.
(new insertion)
Provided further that payment of balance money in calls, outside the issue period, may
be through electronic banking modes.
PRICING IN PREFERENTIAL ISSUE OF SHARES OF COMPANIES HAVING STRESSED ASSETS
Stressed assets that comprise restructured loans and written off assets
besides NPAs.
In banking company assets comprises of loans given and investment (in bonds)
made by banks.
Quality of the asset indicates how much of the loans taken by the borrowers are
repaid in the form of interests and principal.
In case opportunity is in the form of an extended time period for repayment
and a reduced interest rate or such soft conditions.
Hence a new classification is made in the form of stressed assets that
comprises restructured loans and written off assets besides NPAs .
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 12
(new insertion) Regulation – 164 A (1)
In case of frequently traded shares, the price of the equity shares to be allotted pursuant to
the preferential issue shall not be less than the
► average of the weekly high and low of the volume weighted average price of the
related equity shares quoted on a recognised stock exchange during the two weeks
preceding the relevant date.
Regulation – 164 A (2)
No allotment of equity shares shall be made unless the issuer company meets any two of the
following criteria:
(a) the issuer has disclosed all the defaults relating to the payment of interest/ repayment
of principal amount on loans from banks / financial institutions/ Systemically Important Non-
Deposit taking Non-banking financial companies/ Deposit taking Non-banking financial
companies and /or listed or unlisted debt securities in terms of SEBI Circular dated November
21, 2019 and such payment default is continuing for a period of at least 90 calendar days
after the occurrence of such default;
(b) there is an Inter-creditor agreement in terms of Reserve Bank of India (Prudential
Framework for Resolution of Stressed Assets) Directions 2019 dated June 07, 2019; c) the
credit rating of the financial instruments (listed or unlisted), credit instruments / borrowings
(listed or unlisted) of the listed company has been downgraded to ―D‖.
Regulation – 164 A (3)
The issuer company making the preferential issue shall ensure compliance with the following
conditions:
(a) The preference issue shall be made to a person not part of the promoter or promoter
group as on the date of the board meeting to consider the preferential issue. The preference
issue shall not be made to the following entities:
(i) undischarged insolvent in terms of the Insolvency and Bankruptcy Code, 2016;
(ii) ‗wilful defaulter‟ as per the guidelines of the Reserve Bank of India issued under the
Banking Regulation Act, 1949;
(iii) person disqualified to act as a director under the Companies Act,2013;
(iv) a person debarred from trading in securities or accessing the securities market by
the Board;
Explanation:The restriction under (iv) shall not apply to the persons or entities mentioned
therein who were debarred in the past by the Board and the period of debarment is already
over as on the date of the board meeting considering the preferential issue.
(v) a person declared as a fugitive economic offender;
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 13
(vi) a person who has been convicted for any offence punishable with imprisonment -
A. For two years or more under any Act specified under the Twelfth Schedule of the
Insolvency and Bankruptcy Code, 2016
B. For seven years or more under any law for the time being in force:
Provided that such restriction shall not be applicable to a person after the expiry of a
period two years from the date of his release from imprisonment.
(vii) A person who has executed a guarantee in favour of a lender of the issuer and
such guarantee has been invoked by the lender and remains unpaid in full or part.
Regulation – 164 A (4)
The resolution for the preferential issue and exemption from open offer shall provide for the
following:
(a) The votes cast by the shareholders in the „public‟ category in favour of the proposal shall
be more than the number of votes cast against it.
The proposed allottee (s) in the preferential issue that already hold specified securities
shall not be included in the category of „public‟ for this purpose:
Provided that where the company does not have an identifiable promoter; the
resolution shall be deemed to have been passed if the votes cast in favour are not less than
three times the number of the votes, if any, cast against it.
Regulation – 164 A (5)
The proceeds of such preferential issue shall not be used for any repayment of loans
taken from promoters/ promoter group/ group companies. The proposed use of
proceeds shall be disclosed in the explanatory statement sent for the purpose of the
shareholder resolution.
Regulation – 164 A (6)
(a) The issuer shall make arrangements for monitoring the use of proceeds of the issue by a
public financial institution or by a scheduled commercial bank, which is not a related party to
the issuer:
(i) The monitoring agency shall submit its report to the issuer in the format specified in
terms of Schedule XI (with fields as applicable) on a quarterly basis until at least 95%
percent of the proceeds of the issue have been utilized.
(ii) The board of directors and the management of the issuer shall provide their comments on
the findings of the monitoring agency as specified in Schedule XI.
(iii) The issuer shall, within 45 days from the end of each quarter, publicly disseminate
the report of the monitoring agency by uploading the same on its website as well
as submit the same to the stock exchange(s) on which the equity shares of the issuer are
listed.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 14
(b) The proceeds of the issue shall also be monitored by the Audit Committee till utilization of
the proceeds.
Regulation – 164 A (7)
The allotment made shall be locked-in for a period of 3 years from the last date of
trading approval.
Regulation – 164 A (8)
The statutory auditor and the audit committee shall certify that all conditions under
regulation 164A (1), (2), (3), (4) and (5) are met at the time of dispatch of notice for general
meeting proposed for passing the special resolution and at the time of allotment.
OPTIONAL PRICING IN PREFERENTIAL ISSUE
Regulation - 164B
(1) In case of frequently traded shares, the price of the equity shares to be allotted pursuant
to the preferential issue shall be determined by regulation 164 or regulation 164B, as
opted for.
(2) The price of the equity shares to be allotted pursuant to the preferential issue shall not be
less than the higher of the following:
(a) the average of the weekly high and low of the volume weighted average price of the
related equity shares quoted on the recognised stock exchange during the 12 weeks
preceding the relevant date; or
(b) the average of the weekly high and low of the volume weighted average prices of the
related equity shares quoted on a recognised stock exchange during the 2 weeks
preceding the relevant date.
(3) Specified securities allotted on a preferential basis using the pricing method determined under
sub-regulation (2) shall be locked-in for a period of three years.
(4) The pricing method determined at sub-regulation (2) shall be availed in case of allotment by
preferential issue made between July 01, 2020 or from the date of notification of this
regulation, whichever is later and December 31, 2020.
(5) All allotments arising out of the same shareholders approval shall follow the same pricing
method.
ELIGIBILITY CONDITIONS QIP
Eligibility conditions
(3) The issuer shall not make any subsequent qualified institutions placement until the expiry of
two weeks (Substituted by the words ―six months) from the date of the prior qualified
institutions placement made pursuant to one or more special resolutions
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 15
LISTING OBLIGATION AND DISCLOSURE REQIRENMENTS (LODR)
Regulation - 17
(1B). With effect from April 1, 2022, (earlier April 1, 2020) the top 500 listed entities
shall ensure that the Chairperson of the board of such listed entity shall -
(a) be a non-executive director;
(b) not be related to the Managing Director or the Chief Executive Officer as per the
definition of the term ―relative‖ defined under the Companies Act, 2013:
Provided that this sub-regulation shall not be applicable to the listed entities which do not
have any identifiable promoters as per the shareholding pattern filed with stock exchanges.
Audit Committee.
(New Insertion IN Reg. 18(1)(b))
Regulation – 18 (1)
Every listed entity shall constitute a qualified and independent audit committee in accordance with
the terms of reference, subject to the following:
(a) The audit committee shall have minimum three directors as members.
(b) Two-thirds of the members of audit committee shall be independent directors and in case of
a listed entity having outstanding SR equity shares, the audit committee shall
only comprise of independent directors.
Nomination and remuneration committee
(New Insertion IN Reg. 19(1)(c))
Regulation – 19 (1)
(1) The board of directors shall constitute the nomination and remuneration committee as follows:
(a) the committee shall comprise of at least three directors ;
(b )all directors of the committee shall be non-executive directors; and
(c) at least fifty percent of the directors shall be independent directors and in case of a
listed entity having outstanding SR equity shares,
two thirds of the nomination and remuneration committee shall comprise of
independent directors.
Stakeholders Relationship Committee
(New Insertion IN Reg. 20(2)(a))
Regulation – 20 (2)
(2A) At least three directors, with at least one being an independent director, shall be members of
the Committee and in case of a listed entity having outstanding SR equity shares,
at least two thirds of the Stakeholders Relationship Committee shall comprise
of independent directors.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 16
Risk Management Committee
(New Insertion IN Reg. 21 (2))
Regulation – 21 (2)
(1) The board of directors shall constitute a Risk Management Committee.
(2) The majority of members of Risk Management Committee shall consist of members of the
board of directors and in case of a listed entity having outstanding SR equity shares,
at least two thirds of the Risk Management Committee shall comprise of
independent directors.
(3) The Chairperson of the Risk management committee shall be a member of the board of
directors and senior executives of the listed entity may be members of the committee. 4
(3A) The risk management committee shall meet at least once in a year.
(4) The board of directors shall define the role and responsibility of the Risk Management
Committee and may delegate monitoring and reviewing of the risk management plan to the
committee and such other functions as it may deem fit 44 [such function shall specifically
cover cyber security.
(5) The provisions of this regulation shall be applicable to top 45 [500] listed entities, determined
on the basis of market capitalisation, as at the end of the immediate previous financial year.
ANNUAL REPORT
Regulation – 34 (2)
(f) for the top 1000 (earlier 500 )listed entities based on market capitalization (calculated as
on March 31 of every financial year), business responsibility report describing the
initiatives taken by them from an environmental, social and governance perspective, in the
format as specified by the Board from time to time:
Provided that listed entities other than top 1000 (earlier 500 ) listed companies based on
market capitalization and listed entities which have listed their specified securities on SME
Exchange, may include these business responsibility reports on a voluntary basis in the
format as specified.
OTHER PROVISIONS RELATING TO SECURITIES
Regulation – 41 (3)
The listed entity shall not issue shares in any manner that may confer on any person; superior
or inferior rights AS TO DIVIDEND vis-à-vis
the rights on equity shares that are already listed or inferior voting rights vis-à-vis the
rights on equity shares that are already listed:
Provided that, a listed entity having SR equity shares issued to its promoters/ founders,
may issue SR equity shares to its SR shareholders only through a bonus, split or rights issue
in accordance with the provisions of the SEBI (ICDR) Regulations, 2018 and the Companies Act,
2013.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 17
(Previous Regulation)
The listed entity shall not issue shares in any manner which may confer on any person,
superior rights as to voting or dividend vis à vis the rights on equity shares that are already
listed.
RECORD DATE OR DATE OF CLOSURE OF TRANSFER BOOKS
Regulation – 42 (2) (new proviso inserted)
The listed entity shall give notice in advance of atleast seven working days (excluding the date of
intimation and the record date) to stock exchange(s) of record date specifying the purpose of the
record date:
Provided that in the case of rights issues, the listed entity shall give notice in advance
of at least three working days (excluding the date of intimation and the record date).
DELISTING
APPLICABILITY
Regulation – 3
(1) These regulations shall apply to delisting of equity shares of a company from all or any of
the recognised stock exchanges where such shares are listed
Provided that these regulations shall not apply to securities listed without making a
public issue, on the institutional trading platform of a recognised stock exchange.
(new insertion)
Explanation: For the purposes of these regulations, the term “shares” shall include
equity shares having superior voting rights.
POHIBITION OF INSIDER TRADING SEBI (PIT)
COMMUNICATION OR PROCUREMENT OF
UNPUBLISHED PRICE SENSITIVE INFORMATION
Regulation – 3 (5) (Subsituted)
The board of directors or head(s) of the organisation of every person required to handle
unpublished price sensitive information shall ensure that
a structured digital database is maintained containing the nature of unpublished
price sensitive information and
the names of such persons who have shared the information and also the
names of such persons with whom information is shared under this regulation along
with the PAN or any other identifier authorized by law where PAN is not available.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 18
Such database shall not be outsourced and shall be maintained internally with
adequate internal controls and checks such as time stamping and audit trails to
ensure non - tampering of the database.
(Previous Regulation)
Regulation –3 (5)
such persons or entities as the case may be with whom information is shared
under this regulation along with the PAN or any other identifier authorized by law
where PAN is not available.
Such databases shall be maintained with adequate internal controls and checks such as
time stamping and audit trails to ensure non - tampering of the database.
Regulation – 3 (6) (new insertion)
The board of directors or head(s) of the organisation of every person required to
handle unpublished price sensitive information shall ensure that
the structured digital database is preserved for a period of not less than 8
years after completion of the relevant transactions and
in the event of receipt of any information from the Board regarding any
investigation or enforcement proceedings, the relevant information in the structured
digital database shall be preserved till the completion of such proceedings
Disclosures by certain persons
Regulation – 7 (2) Continual Disclosures
Regulation – 7 (2)(c) (New Insertion)
The above disclosures shall be made in such form and such manner as may be
specified by the Board from time to time.
INFORMANT INCENTIVES AND REWARDS
(New Insertion)
DEFINITIONS
Regulation – 7A (1) In this Chapter, unless the context otherwise requires: -
(a) ‗Investor Protection and Education Fund‟ means the Investor Protection and Education
Fund created by the Board under section 11 of the Act;
(b) „INFORMANT‟ means
an individual(s), who voluntarily submits to the Board a Voluntary Information
Disclosure Form relating to an alleged violation of insider trading laws that has
occurred, is occurring or has a reasonable belief that it is about to occur, in a manner
provided under these regulations, regardless of whether such individual (s) satisfies the
requirements, procedures and conditions to qualify for a reward;
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 19
(c) „INFORMANT INCENTIVE COMMITTEE‟ means
the High Powered Advisory Committee constituted by the Board in the manner
as may be specified under regulation 11 of the Securities and Exchange Board of India
(Settlement Proceedings) Regulations, 2018.
(d) „INSIDER TRADING LAWS‟ means the following provisions of securities laws,-
i. Section 15G of the Act;
ii. regulation 3 of these regulations;
iii. regulation 4 of these regulations;
iv. regulation 5 of these regulations; and
v. regulation 9 or regulation 9A of these regulations, in so far as they pertain to
trading or communication of unpublished price sensitive information.
(e) ‗IRRELEVANT, VEXATIOUS AND FRIVOLOUS INFORMATION‟ includes, reporting of
information which in the opinion of the Board, -
(i) Does not constitute a violation of insider trading laws; or
(iii) Is rendered solely for the purposes of malicious prosecution; or
(iv) Is rendered intentionally in an effort to waste the time and resource of the Board.
(f) „LEGAL REPRESENTATIVE‟ means a duly authorised individual who is admitted to
the practice of law in India;
(g) „MONETARY SANCTIONS‟ shall mean
any non-monetary settlement terms or any direction of the Board, in the nature of
disgorgement under securities laws aggregating to at least Rupees 1 crore arising
from the same operative facts contained in the original information.
(h) ‗ORIGINAL INFORMATION‟ means
any relevant information submitted in accordance with these regulations pertaining to any
violation of insider trading laws that is:-
(i) derived from the independent knowledge and analysis of the Informant;
(ii) not known to the Board from any other source, except where the Informant is the
original source of the information;
(iii) is sufficiently specific, credible and timely to -
(1) commence an examination or inquiry or audit,
(2) assist in an ongoing examination or investigation or inquiry or audit,
(3) open or re-open an investigation or inquiry, or
(4) inquire into a different conduct as part of an ongoing examination or investigation
or inquiry or audit directed by the Board;
(iv) not exclusively derived from an allegation made in a judicial or administrative
hearing, in a Governmental report, hearing, audit, or investigation, or from the
news media, except where the Informant is the original source of the information; and
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 20
(v) not irrelevant or frivolous or vexatious.
Explanation. –Information which does not in the opinion of the Board add to the
information already possessed by the Board is not original information.
(i) ‗OWN ANALYSIS‟ means
the examination and evaluation of the relevant information by the Informant that may be
publicly available, but which reveals analysis that is not known to SEBI:
Provided that such analysis is not derived from professional or confidential
communication protected under the Indian Evidence Act, 1872 (1 of 1872);
(j) ‗OWN KNOWLEDGE‘ means relevant information in the possession of the Informant not
derived from publicly available sources:
Provided that such knowledge is not derived from professional or confidential
communications protected under the Indian Evidence Act, 1872 (1 of 1872);
(k) ‗REWARD‘ means
any gratuitous monetary amount for which an Informant is declared eligible as per the
provisions of these regulations;
(m) ‗VOLUNTARILY PROVIDING information‘ means
providing the Board with information before receiving any request, inquiry, or demand
from the Board, any other Central or State authorities or other statutory authority
about a matter, to which the information is relevant;
Submission of Original Information to the Board
Regulation – 7B
(1) An Informant shall submit Original Information by furnishing the Voluntary Information
Disclosure Form to the Office of Informant Protection of the Board in the format and manner
set out in Schedule D.
The Voluntary Information Disclosure Form may be submitted through informant‟s legal
representative:
Provided that where the Informant does not submit the Voluntary Information Disclosure
Form through a legal representative, the Board may require such Informant to appear
in person to ascertain his/her identity and the veracity of the information so provided.
Explanation. – Where any information pertaining to any violation of the Securities
Laws is received in a manner not in accordance with the manner provided under
these regulations, the Board may require such information to be filed with it in
accordance with these regulations or reject the same.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 21
(2) The legal representative shall,-
i. Verify the identity and contact details of the Informant;
ii. Unless otherwise required by the Board, maintain confidentiality of the identity and
existence of the Informant, including the original Voluntary Information Disclosure Form;
iii. Undertake and certify that he/she,-
(a) Has reviewed the completed and signed Voluntary Information Disclosure Form for
completeness and accuracy and that the information contained therein is true, correct
and complete to the best of his/ her knowledge;
(b) Has obtained a irrevocable consent from the Informant to provide to the Board with
original Voluntary Information Disclosure Form whenever required by the Board; and
(c) Agrees to be legally obligated to provide the original
Voluntary Information Disclosure Form within seven (7) calendar days of receiving
such requests from the Board.
iv. Submits to the Board, the copy of the Voluntary Information Disclosure Form in the
manner provided in Schedule D of these regulations along with a signed certificate as
required under clause (iii) of this sub-regulation (2).
(3) An Informant shall while submitting the Voluntary Information Disclosure Form shall
expunge(remove) such information from the content of the information which could
reasonably be expected to reveal his or her identity and in case where such information
cannot be expunged, the Informant may identify such part of information or any document
that the Informant believes could reasonably be expected to reveal his or her identity.
Receipt of Original Information by the Board
Regulation – 7C
(1) The Board may designate a division to function as the independent Office of
Informant Protection.
(2) The Office of Informant Protection shall perform the following functions as may be
specified by the SEBI, including, -
i. Receiving and registering the Voluntary Information Disclosure Form;
ii. Making all necessary communications with the Informant;
iii. Maintaining a hotline for the benefit of potential Informant;
iv. Maintaining confidentiality of the legal representative of the Informant and act as an
interface between the Informant and the officers of the SEBI;
v. Interacting with the Informant Incentive Committee;
vi. Issuing press releases and rewards relating to Informant; and
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 22
vii. Submitting an annual report to the SEBI relating to the functioning of the Office of
Informant Protection.
(3) On receipt of the Voluntary Information Disclosure Form,
The Office of Informant Protection shall communicate the substance of the information
along with the evidence submitted by the informant to the relevant department or division
of the SEBI for examination and initiation of necessary action, if any.
(4) The SEBI shall not be required to send any intimation or acknowledgement to the
Informant or any other person, of the examination or action initiated by the SEBI, if any,
pursuant to receipt of the Voluntary Information Disclosure Form or information under these
regulations, including rejection thereof.
Informant Reward
Regulation – 7D
(1) Upon collection or substantial recovery of the monetary sanctions amounting to
at least twice the Reward,
the SEBI may at its sole discretion, declare an Informant eligible for Reward and
intimate the Informant or his or her legal representative to file an application in the
format provided in Schedule-E for claiming such Reward.
However the amount of Reward shall be 10 % of the monetary sanctions collected or
recovered and
shall not exceed Rupees 1 crore or such higher amount as the SEBI may specify from
time to time.
The SEBI may if deemed fit, out of the total Reward payable, grant an interim reward
not exceeding Rupees 10 lacs or such higher amount as the SEBI may specify from time
to time, on the issue of final order by the SEBI against the person directed to disgorge.
(2) In case of more than one Informant jointly providing the Original Information,
the Reward, shall be divided equally amongst the total number of Informants.
(3) The Reward under these regulations shall be paid from the Investor Protection and
Education Fund.
Determination Of Amount Of Reward Regulation – 7E
(1) The amount of the Reward, if payable, shall be determined by the SEBI.
(2) While determining the amount of Reward the SEBI may specify the factors that may be
taken into consideration by the Informant Incentive Committee.
(3) An Informant may be eligible for a Reward whether or not he reported the matter to
his organization as per its internal legal and compliance procedures and irrespective of such
organization‘s compliance officer subsequently providing the same Information to the Board.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 23
Application for Reward
Regulation – 7F
(1) Informants who are considered tentatively eligible for a Reward, shall submit the
Informant Reward Claim Form set out in Schedule E to the SEBI within the period
specified in the intimation sent by the Board.
(2) Prior to the payment of a Reward, an Informant shall directly or through his or her
legal representative, disclose his or her identity and provide such other information as the
SEBI may require.
Rejection of claim for Reward.
Regulation – 7G
No Reward shall be made to an Informant:
(1) who does not submit original information;
(2) who has acquired the Original Information, through or as
a member, officer, or an employee of:-
(i) any regulatory agency constituted by or under any law in India or outside India,
including the SEBI;
(ii) any self-regulatory organization;
(iii) the surveillance or investigation wings of any recognised stock exchange or
clearing corporation; or
(iv) any law enforcement organization including the police or any central or state
revenue authorities.
(3) against whom the SEBI may initiate or has initiated criminal proceedings under
securities laws;
(4) who wilfully refused to cooperate with the SEBI during its course of investigation,
inquiry, audit, examination or other proceedings under securities laws;
(5) who:
(i) knowingly makes any false, fictitious, or fraudulent statement or representation;
(ii) uses any false writing or document knowing that the writing or document contains any
false, fictitious, or fraudulent statement or entry;
(iii) fails to furnish the complete information available with him or accessible by him in
relation to the alleged violation.
(6) who is obligated, under any law or otherwise, to report such Original Information to the
SEBI, including a compliance officer under securities laws. Provided that the SEBI may if
deemed fit, at its sole discretion, exempt a person from any of these disqualifications.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 24
Informant confidentiality
Regulation – 7H
Sharing of information shall be in accordance with such assurances of confidentiality as the SEBI
determines appropriate.
Protection against retaliation and victimization
Regulation – 7I
(1) Every person required to have a Code of Conduct under these regulations
shall ensure that such a Code of Conduct provides for suitable protection against
any discharge, termination, demotion, suspension, threats, harassment,
directly or indirectly or discrimination against any employee who files a Voluntary
Information Disclosure Form,
irrespective of whether the information is considered or rejected by the SEBI or he or
she is eligible for a Reward under these regulations.
(2) Nothing in these regulations shall prohibit any Informant who believes that he or she
has been subject to retaliation or victimization by his or her employer, from approaching the
competent court or tribunal for appropriate relief.
(3) Any employer who violates above, may be liable for penalty, debarment, suspension,
and/or criminal prosecution by the SEBI. However nothing in these regulations will require the
SEBI to direct re-instatement or compensation by an employer.
(4) Nothing in these regulations shall diminish the rights and privileges of or remedies
available to any Informant under any other law in force.
TAKEOVER CODE (SAST)
Substantial acquisition of shares or voting rights
(new proviso inserted to Regulation 3(2)
Regulation – 3(1)
No acquirer shall acquire shares or voting rights in a target company which taken together
with shares or voting rights, if any, held by him and by persons acting in concert with him in such
target company, entitle them to exercise twenty- five per cent or more of the voting rights
in such target company
unless the acquirer makes a public announcement of an open offer for acquiring
shares of such target company in accordance with these regulations
Regulation – 3(2) No acquirer, who together with persons acting in concert with him, has acquired and holds in
accordance with these regulations shares or voting rights in a target company entitling them
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 25
to exercise twenty -five per cent or more of the voting rights in the target company
but less than the maximum permissible non-public shareholding,
shall acquire within any financial year additional shares or voting rights in such target
company entitling them to exercise more than five per cent of the voting rights,
unless the acquirer makes a public announcement of an open offer for acquiring
shares of such target company in accordance with these regulations:
Provided that the acquisition beyond 5% but upto 10% of the voting rights in the
target company shall be permitted for the financial year 2020 -21 only in respect
of acquisition by a promoter pursuant to preferential issue of equity shares by the
target company.
Voluntary Offer.
The relaxation from the first proviso is granted till March 31, 2021.
Regulation – 6 (1)
An acquirer, who together with persons acting in concert with him, holds shares or
voting rights in a target company entitling them to exercise twenty -five per cent or
more but less than the maximum permissible non-public shareholding,
shall be entitled to voluntarily make a public announcement of an open offer
for acquiring shares in accordance with these regulations, subject to their aggregate
shareholding after completion of the open offer not exceeding the maximum permissible
non -public shareholding:
Provided that where an acquirer or any person acting in concert with him has acquired shares
of the target company in the preceding 52 weeks without attracting the obligation to make
a public announcement of an open offer,
he shall not be eligible to voluntarily make a public announcement of an open
offer for acquiring shares under this regulation:
General exemptions.
(new Sub - Regulation inserted)
Regulation – 10 (2A)
An increase in the voting rights of any shareholder beyond the threshold limits
stipulated in sub -regulations (1) and (2) of regulation 3, without the acquisition of
control,
pursuant to the conversion of equity shares with superior voting rights into
ordinary equity shares, shall be exempted from the obligation to make an open offer
under regulation 3.
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 26
Regulation – 10 (2B)
Any acquisition of shares or voting rights or control of the target company
by way of preferential issue in compliance with regulation 164A of the SEBI
(ICDR) Regulations, 2018
shall be exempt from the obligation to make an open offer under sub-
regulation (1) of regulation 3 and regulation 4.
Explanation.-
The above exemption from open offer shall also apply to the target company with
infrequently traded shares which is compliant with the provisions of sub - regulations
(2), (3), (4), (5),(6), (7) and (8) of regulation 164A of the SEBI (ICDR) Regulations, 2018.
The pricing of such infrequently traded shares shall be in terms of regulation 165 of the SEBI
(ICDR) Regulations, 2018.
Provision of escrow
(Second proviso inserted to Regulation 17 (1) & (2)
Regulation – 17(1)
PROVISION OF ESCROW
Not later than two working days prior to the date of the detailed public statement of the open
offer for acquiring shares, the acquirer shall create an escrow account towards security for
performance of his obligations under these regulations, and deposit in escrow account such
aggregate amount as per the following scale:
Sl. No.
CONSIDERATION PAYABLE UNDER THE OPEN OFFER
ESCROW AMOUNT
(a) On the first 500 crores rupees an amount equal to 25% of the consideration
(b) On the balance consideration an additional amount equal to 10% of the
balance consideration
Provided that, where an open offer is made conditional upon minimum level of acceptance,
100% of the consideration payable in respect of minimum level of acceptance or 50% cent
of the consideration payable under the open offer, whichever is higher, shall be deposited in cash
in the escrow account.
Provided further that in case of indirect acquisitions where public announcement has
been made in terms of regulation 13 (2) (e) of these regulations, an amount equivalent to
100% of the consideration payable in the open offer shall be deposited in the escrow account.
Regulation – 17(3)
The escrow account referred to in sub - regulation (1) may be in the form of,—
(a) cash deposited with any scheduled commercial bank;
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 27
(b) bank guarantee issued in favour of the manager to the open offer by any scheduled
commercial bank; or
(c) deposit of frequently traded and freely transferable equity shares or other freely transferable
securities with appropriate margin:
Provided that securities sought to be provided towards escrow account under clause (c) shall be
required to conform to the requirements set out in sub-regulation (2) of regulation 9.
Provided further that the deposit of securities shall not be permitted in respect of
indirect acquisitions where public announcement has been made in terms regulation 13
(2) (e) of these regulations.
REAL ESTATE INVESTMENT TRUSTS (REIT) (Old Syllabus)
Exemption from enforcement of the regulations in special cases.
(new insertion)
Regulation – 32A (same as stated in above regulations)
INFRASTRUCTURE INVESTMENT TRUST (INVIT)
(Old Syllabus)
Eligibility criteria.
Regulation – 4 (2) (e) (ii)
the investment manager has not less than five years of experience in fund management
or advisory services or development in the infrastructure sector or the combined experience
of the directors/partners/employees of the investment manager in fund management or
advisory services or development in the infrastructure sector is not less than 30 years:
Provided that for computing the combined experience, only the experience of the
directors/partners/employees with more than 5 years of experience in fund management
or advisory services or development in the infrastructure sector shall be considered
(Prior to the substitution it read as ‗the investment manager has not less than five years‘
experience in fund management or advisory services or development in the infrastructure
sector.)
Exemption from enforcement of the regulations in special cases.
(new insertion) Regulation – 32A (same as stated in above regulations)
VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra
Page 28
MY BEST WISHES
CS SANJEEV SAPRA
(Whatsup no. – 9899064260)