Sebi and Fema Act - Final 1

SIMSR MFM Ist SEMSIMSR MFM Ist SEM 11

SEBI and FEMA ActSEBI and FEMA Act

ANOOP K SRIVASTAVAANURAG MANGAIN

HARDIK GANDHIRONAK PANCHALSACHIN MOGHEVINAYAK DAVE


FOREIGN EXCHANGE FOREIGN EXCHANGE MANAGEMENT ACT 1999MANAGEMENT ACT 1999

INTRODUCTIONINTRODUCTION HISTORYHISTORY GENERAL INFORMATIONGENERAL INFORMATION PROVISIONS AND OPERATIONAL RESPONSIBILITYPROVISIONS AND OPERATIONAL RESPONSIBILITY ENFORCEMENT DIRECTORATEENFORCEMENT DIRECTORATE ALLIED ACTSALLIED ACTS MAIN OBJECTIVESMAIN OBJECTIVES CASE STUDIESCASE STUDIES


Introduction to FEMAIntroduction to FEMA

The objective of the Act is to The objective of the Act is to consolidate and amend the law consolidate and amend the law relating to foreign exchange with the relating to foreign exchange with the objective of facilitating external trade objective of facilitating external trade and payments and for promoting the and payments and for promoting the orderly development and orderly development and maintenance of foreign exchange maintenance of foreign exchange market in India.market in India.


History of FEMAHistory of FEMA

Foreign Exchange Management ActForeign Exchange Management Act (FEMA) (FEMA) replaced Foreign Exchange Regulation Act of 1973 replaced Foreign Exchange Regulation Act of 1973 (FERA) in India was repealed on 1 June, 2000.(FERA) in India was repealed on 1 June, 2000.

ExchangeExchange Control Control ActAct, during the , during the second world warsecond world war

Foreign Exchange Regulation ActForeign Exchange Regulation Act in in 19471947. .

Why FERA was replaced by FEMA?Why FERA was replaced by FEMA? Foreign Exchange Reserve Position Foreign Exchange Reserve Position Rules and Regulations for Fera Under FERA, Rules and Regulations for Fera Under FERA,


Negative impact of FERA Negative impact of FERA

HOW HAWALA TRADING EFFECTED INDIAN HOW HAWALA TRADING EFFECTED INDIAN ECONOMYECONOMY

Indian rupee rates Vs. U.S. dollar were as under. Indian rupee rates Vs. U.S. dollar were as under. Year 1981Rs. 8 per dollar.Year 1981Rs. 8 per dollar.

Year 1991Rs. 18 per dollar.Year 1991Rs. 18 per dollar.

Year 1999Rs. 43 per dollar.Year 1999Rs. 43 per dollar.


General InformationGeneral Information

How different is FEMA from FERA?How different is FEMA from FERA?

Objective Objective Transactions in Capital Account and Current Transactions in Capital Account and Current

Account. Account. Civil/Criminal Prosecution Civil/Criminal Prosecution Who is resident in India ?Who is resident in India ? Credit Cards, Debit cards etc.Credit Cards, Debit cards etc.

EXTENSION/APPLICABILITY OF THE ACTEXTENSION/APPLICABILITY OF THE ACT


CLASSIFICATION OF CLASSIFICATION OF TRANSACTIONSTRANSACTIONS

CAPITAL ACCOUNT TRANSACTIONS:CAPITAL ACCOUNT TRANSACTIONS:

Transactions that alter the domestic assets and Transactions that alter the domestic assets and liabilities of a person resident in India or a person liabilities of a person resident in India or a person resident outside India in relation to his country.resident outside India in relation to his country.

CURRENT ACCOUNT TRANSACTIONSCURRENT ACCOUNT TRANSACTIONS::

Transactions which do not fall under the ambit of Transactions which do not fall under the ambit of capital account transactions are considered as current capital account transactions are considered as current account transactions. account transactions.


FEMA PROVISIONS & FEMA PROVISIONS & OPERATIONAL OPERATIONAL

RESPONSIBILITYRESPONSIBILITY Provisions under FEMA ActProvisions under FEMA Act Administration of FEMA ProvisionsAdministration of FEMA Provisions Authorized PersonAuthorized Person Responsibilities of Authorized PersonResponsibilities of Authorized Person


FEMA 1999 FEMA 1999 ENFORCEMENT DIRECTORATEENFORCEMENT DIRECTORATE

Established by Central Govt to investigate due Established by Central Govt to investigate due adherence to the provisions of the Act by market adherence to the provisions of the Act by market participants.participants.

Concerned with enforcement of the provisions of the Concerned with enforcement of the provisions of the Act to prevent leakage of foreign exchange occurring Act to prevent leakage of foreign exchange occurring through various malpractices.through various malpractices.

Directorate of Enforcement is responsible for Directorate of Enforcement is responsible for detection of cases relating to violation and detection of cases relating to violation and performance of adjudicatory functions to curb performance of adjudicatory functions to curb malpractices.malpractices.


ENFORCEMENT DIRECTORATE ENFORCEMENT DIRECTORATE ORG SET UP AND FUNCTIONSORG SET UP AND FUNCTIONS

ORGANISATIONAL SET UPORGANISATIONAL SET UP : :

Head Quartered at New Delhi.Head Quartered at New Delhi. 7 Zonal Offices headed by deputy directors, 1 each in 4 metros 7 Zonal Offices headed by deputy directors, 1 each in 4 metros

& Jalandhar, Ahmedabad & Bangalore.& Jalandhar, Ahmedabad & Bangalore. 9 sub zonal offices headed by Assistant Directors at Agra, 9 sub zonal offices headed by Assistant Directors at Agra,

Srinagar, Jaipur, Varanasi, Trivandrum, Calicut, Hyderabad, Srinagar, Jaipur, Varanasi, Trivandrum, Calicut, Hyderabad, Guwahati & Goa.Guwahati & Goa.

1 Unit at Madurai headed by Chief Enforcement Officer.1 Unit at Madurai headed by Chief Enforcement Officer. 3 Special Directors of Enforcement and 1 Additional Director 3 Special Directors of Enforcement and 1 Additional Director

of Enforcement.of Enforcement.


ENFORCEMENT DIRECTORATE ENFORCEMENT DIRECTORATE FUNCTIONS FUNCTIONS

To collect and develop intelligence relating to To collect and develop intelligence relating to violation of provisions of FEMA.violation of provisions of FEMA.

To conduct searches of suspected persons, To conduct searches of suspected persons, conveyances and premises for seizing incriminating conveyances and premises for seizing incriminating materials.materials.

To enquire into and investigate suspected violations To enquire into and investigate suspected violations or provisions of FEMA.or provisions of FEMA.

To adjudicate cases of violations of FEMA for To adjudicate cases of violations of FEMA for levying penalties and also for confiscating the levying penalties and also for confiscating the amounts involved in contraventions.amounts involved in contraventions.

To realise penalties in departmental adjudication.To realise penalties in departmental adjudication.


CONTRAVENTION AND CONTRAVENTION AND PENALTIESPENALTIES

Penalty of upto 3 times of the sum involved in each Penalty of upto 3 times of the sum involved in each contravention where such amount is quantifiable.contravention where such amount is quantifiable.

Penalty of upto Rs 2 lakhs where the amount is not Penalty of upto Rs 2 lakhs where the amount is not quantifiable.quantifiable.

In case of continuing contravention, further penalty of Rs In case of continuing contravention, further penalty of Rs 5,000.00 for every day after the first day of contravention5,000.00 for every day after the first day of contravention

Confiscation of currency, security or any other money or Confiscation of currency, security or any other money or property in respect of which the contravention has taken place.property in respect of which the contravention has taken place.

Civil imprisonment for failure to make full payment of the Civil imprisonment for failure to make full payment of the penalty imposed within 90 days from the notice of payment.penalty imposed within 90 days from the notice of payment.


FEMA 1999FEMA 1999ALLIED ACTS ALLIED ACTS

COFEPOSA – Conservation of Foreign COFEPOSA – Conservation of Foreign Exchange & Prevention of Smuggling Exchange & Prevention of Smuggling Activities Act, 1974.Activities Act, 1974.

SAFEMA – The Smuggling & Foreign SAFEMA – The Smuggling & Foreign Exchange Manipulation (Forfeiture of Exchange Manipulation (Forfeiture of Property) Act, 1976.Property) Act, 1976.

Foreign Contribution (Regulation) Act, 1976.Foreign Contribution (Regulation) Act, 1976.


Main Objectives of FEMA ActMain Objectives of FEMA Act

Controls dealings in foreign exchange Controls dealings in foreign exchange Restrains any person resident in India from Restrains any person resident in India from

dealing in foreign exchange dealing in foreign exchange Deals with capital account transactions. Deals with capital account transactions. Deals with export of goods and services. Deals with export of goods and services. Casts the responsibility on the persons Casts the responsibility on the persons

resident resident Pertains to the establishment of Pertains to the establishment of

Directorate of Enforcement and the Directorate of Enforcement and the empowers it to control voilation of the actempowers it to control voilation of the act


CAPITAL ACCOUNT CAPITAL ACCOUNT CONVERTIBILITYCONVERTIBILITY

What is CACWhat is CAC Prerequisite of CACPrerequisite of CAC Evolution of CAC in India Economic ScenarioEvolution of CAC in India Economic Scenario Reasons for Introduction of CAC in IndiaReasons for Introduction of CAC in India Benefits and Drawbacks of CACBenefits and Drawbacks of CAC


CASE SYUDY 1CASE SYUDY 1

Vodafone(Briton)A Foreign company

HTIL(Whampoa group of Li-Ka Shing.

Hong KongA foreign company

Hutchison EssorHutchison EssorIndian CompanyIndian Company

67%

Takes over

Asim Ghosh-12%A.Singh and other companies

(Minority)

Essor group


Case Study – Contd…..Case Study – Contd…..

ED Has Issued 715 notices for ED Has Issued 715 notices for violation of FEMA in last three violation of FEMA in last three yearsyears

Appolo HospitalsAppolo Hospitals Case Against Vijay MallyaCase Against Vijay Mallya Reliance Industries LimitedReliance Industries Limited Yum RestaurantsYum Restaurants


SEBISEBI SECURITIES EXCHANGE BOARD OF INDIASECURITIES EXCHANGE BOARD OF INDIA


HISTORY OF STOCK MARKET & HISTORY OF STOCK MARKET & SEBISEBI

First Stock Exchange made in First Stock Exchange made in 1602 and East India Company 1602 and East India Company was the first company to was the first company to purchase shares.purchase shares.

Bombay Stock Exchange was Bombay Stock Exchange was established in 1875established in 1875

Earlier stock exchanges were Earlier stock exchanges were dealing in commodities marketdealing in commodities market


PRIOR TO SEBI……PRIOR TO SEBI……

Securities Contracts (Regulation) Act 1956 was Securities Contracts (Regulation) Act 1956 was formed to control stock markets and securities in formed to control stock markets and securities in IndiaIndia

IT was an Act which empowers Central Govt to IT was an Act which empowers Central Govt to recognize stock exchanges and has total control recognize stock exchanges and has total control over it. Exchanges have to submit periodical over it. Exchanges have to submit periodical returns or govt may call for direct enquiries returns or govt may call for direct enquiries


HOW SEBI CAME IN TO HOW SEBI CAME IN TO PICTUREPICTURE

The World Bank and the International The World Bank and the International Monetary Fund (IMF) have introduced a Monetary Fund (IMF) have introduced a benchmark i.e., Financial Services benchmark i.e., Financial Services Assessment Programme (FSAP) Assessment Programme (FSAP)

The mission of SEBI is to make India as The mission of SEBI is to make India as one of the best securities market of the one of the best securities market of the world and SEBI as one of the most world and SEBI as one of the most respected regulator in the world.respected regulator in the world.


Objectives and Functions of SEBIObjectives and Functions of SEBI

Objectives of SEBI:Objectives of SEBI:

It tries to develop the securities market. It tries to develop the securities market. Promotes Investors Interest.Promotes Investors Interest. Makes rules and regulations for the securities market.Makes rules and regulations for the securities market.

Functions Of SEBI:Functions Of SEBI: Regulates Capital MarketRegulates Capital Market Checks Trading of securities.Checks Trading of securities. Checks the malpractices in securities market.Checks the malpractices in securities market. It enhances investor's knowledge on market by providing It enhances investor's knowledge on market by providing

education.education. It regulates the stockbrokers and sub-brokers.It regulates the stockbrokers and sub-brokers. To promote Research and Investigation To promote Research and Investigation


CASE STUDIESCASE STUDIES

SEBI has directed Dipak Patel (U.S.A Passport SEBI has directed Dipak Patel (U.S.A Passport No.209189753 ), Portfolio Manager of M/s No.209189753 ), Portfolio Manager of M/s Passport India Investment (Mauritius) Ltd, Passport India Investment (Mauritius) Ltd, Kanaiyalal Baldev Patel (PAN Kanaiyalal Baldev Patel (PAN AEWPP1442H ), Anandkumar Baldevbhai AEWPP1442H ), Anandkumar Baldevbhai Patel (PAN AACFB8866B ) and Bhoomi Patel (PAN AACFB8866B ) and Bhoomi Industries (PAN AACFB8866B) not to buy, Industries (PAN AACFB8866B) not to buy, sell or deal in any securities, directly or sell or deal in any securities, directly or indirectly till further directions in this regard. indirectly till further directions in this regard.

Sebi and Fema Act - Final 1

Documents

Transcript of Sebi and Fema Act - Final 1