SEBI Current Affairs: October, 2018 (Part – II)

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Relevant for SEBI Grade A 2018 Examination

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Sebi revises norms for recovery of investors' money

• In case an entity is not traceable or is notcomplying with Sebi directions, therecovery officer can appoint anadministrator for the purpose of sellingthe properties attached.

• Only an entity registered with the IBBI asinsolvency resolution professional would beconsidered eligible for appointment asadministrator.

• Insolvency and Bankruptcy Board of India(IBBI) is implementing the Insolvency andBankruptcy Code.

The new regulations Sebi (Appointment of

Administrator and Procedure for Refunding to the

Investors) has come into effect from October 3.

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Sebi asks suspected shell cos to cooperate in forensic audits

• Sebi has asked over a dozensuspected shell companies toextend cooperation to ensurecompletion of forensic audits in atime-bound manner, failing whichthey would face stringent tradingcurbs.

• The forensic audit is beingconducted by independent auditorsappointed by stock exchange on thedirection of SEBI.

Shell companies are dubious entities that are mainly used for illegal money laundering.

However, the term 'shell company' is not defined

under the Companies Act.

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MDs at stock exchanges, depositories, clearing corporations to have 2 terms of 5 years each

• Sebi recently approved changes toregulations governing MarketInfrastructure Institutions (MIIs)

• wherein the first term in stockexchanges, depositories andclearing corporations may beextendable by another term,subject to satisfactory performancereview.

SEBI also modified thedefinition and normsrelating to disclosure ofthe compensation of thekey managementpersonnel.

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More about reforms

• Besides, a cooling-off period of one year should be applicable priorto nomination as a public interest director (PID) in another MII,while that of three years for a director to become a shareholderdirector in the same institution or a director in its subsidiary.

• A person shall be nominated as a public interest director for amaximum of three terms across a depository/a recognised stockexchange / a recognised clearing corporation, subject to a maximumage limit of 75 years.

• According to the regulator, the number of PIDs, on the governingboard and the committees of the MIIs, should be at least equal tothe number of shareholder directors (including the managingdirector).

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Sebi eases cost, compliance burden on issuer of debt securities

• To ease the cost and compliance burden on theissuer of securities, Sebi has done away withthe requirement of 1 per cent securitydeposits with exchanges for public issuance ofdebt securities.

• Currently, 1 per cent of the amount offered forsubscription to the public is required to bedeposited with the stock exchanges

• so that complaints relating to refund ofapplication money, allotment of securities anddispatch of certificates among others can beresolved speedily.

The decision comes after the board of Sebi approved a proposal in

this regard in its meeting recently.

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Sebi asks DPs to report FPI registration on monthly basis

• With an aim to bring transparency inprocessing of applications for FPI registration,

• Sebi recently asked depository participants toinform on monthly basis about the averagetime taken by them in dealing such requests.

• The designated depository participants (DDPs)will have to provide the number of foreignportfolio investors (FPI) applications receivedand the average time taken in processing themduring the immediate preceding month toSebi by fifth working day of every month, in aprescribed format.

DDP will have to endeavourto dispose of the application

for grant of registration as soon as possible but not later than 30 days after receipt of

such application

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Sebi cautions investors against dealing with foreign trading portals

• SEBI recently cautioned investorsagainst dealing with foreign tradingportals or platforms.

• It said domestic investors are beingdrawn into online trading by overseaswebsites and platforms.

• Sebi said as these websites are notbeing supervised by any regulatorybody in India, investors need to becautious when it comes to dealingwith them.

Sebi said investors dealing with recognised stock exchanges in

India have options such as dispute resolution mechanism

and investor grievance redressalmechanism.

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SEBI & Investor Dispute Redressal

• SEBI has a comprehensive mechanism to facilitate redressal ofinvestor grievances against intermediaries and listed companies.

• It follows up with the companies and intermediaries who do notredress investors' grievances, by sending reminders to them andhaving meetings with them.

• It takes appropriate enforcement actions as provided under the lawwhere progress in redressal of investor grievances is not satisfactory.

• It has set up a comprehensive arbitration mechanism in stockexchanges and depositories for resolution disputes of the investors.

• The stock exchanges have investor protection funds to compensateinvestors when a broker is declared a defaulter.

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Sebi to levy Rs 1 lakh per exchange on agri-commodity derivatives turnover

• Sebi has drawn up a framework to levy nominalregulatory fee of Rs 1 lakh per exchange onturnover arising from agricultural commodityderivatives, instead of levying charges based onturnover slab rates, a move that is expected tobenefit farmers.

• In order to pass on the desired benefits fromreduction of regulatory fees, Sebi board lastmonth said exchanges dealing with agriculturalcommodities derivatives will create a separatefund earmarked for the benefit of farmers orFPOs (Farmer Producer Organisations).

Sebi has amended Sebi's(Regulatory Fee on StockExchanges) Regulations,which came into effect fromApril 1, 2018.

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Sebi rejigs primary market advisory panel

• Sebi has reconstituted its Primary MarketAdvisory Committee (PMAC) which advisesit on issues related to the regulation anddevelopment of IPOs and other suchsegments.

• The terms of reference of the committeeinclude advising Sebi on matters to betaken up for changes in the legalframework to introduce simplification andtransparency in systems and procedures inthe primary market.

The 24-member panel ischaired by T V MohandasPai, Chairman of theManipal Global EducationServices.

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• To secure the interests of debenture holders oflisted debt issues, Sebi proposed a slew ofmeasures to strengthen the regulatoryframework for debenture trustees,

• including raising minimum net worthrequirement for registration of such entities toRs 10 crore from the current Rs 2 crore.

• The new criteria will help in restrictingregistration of debenture trustees (DTs) tofinancially sound entities.

Issuing a consultation paper, the regulator has suggested three years time period for

attaining the networthrequirement.

Sebi proposes measures to strengthen framework for debenture trustees

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What are Debenture Trustees ?

• A debenture trustee, in market parlance, is aperson or entity that serves as the holder ofdebenture stock for the benefit of anotherparty.

• The debenture trustee serves are the officialrepresentative for the debenture investors and

• is responsible for liquidating the collateral ofthe trust in the event that the companydefaults on its debentures.

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Debenture Trustee

• A debenture trustee means a trustee of a trust deed for securing anyissue of debentures of a body corporate.

• The trustee serves as a liaison (the person who keeps in contact withdifferent groups) between the company that issued the debenturesand the debenture holders.

CompanyDebenture -

holdersTrustee

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More about Proposals

• Further, the regulator proposed that there should be no requirementof calling for a meeting of debenture holders in the event of defaultby the issuer in case of public issues.

• The DT can directly enforce the security without obtaining anyconsent from the debenture holders.

• According to Sebi, there have been cases of delay in enforcing thesecurity in the event of default, which is detrimental to the interestsof the investors.

• SEBI has proposed various measures and sought comments frompublic till November 16 on the same.

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BSE, Sebi organise awareness program for SMEs, Startups

• BSE along with regulator Sebiorganised an awareness programmein Shimla for small and medium scaleenterprises, startups to help themknow the benefits of listing andeligibility criteria.

• The event was focused on clarifyingthe eligibility criteria to the SMEs andstart-ups and the explaining themseveral benefits of getting theircompany listed.

A recently listed company on BSE's SME platform, Inflame appliance Ltd also shared its

experience on how the company benefited from the

BSE's platform.

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BSE and NSE SME Platform

• BSE Ltd has set up the BSE SMEPlatform as per the rules andregulations laid down by SEBI.

• Similarly, NSE has setup EmergePlatform for SMEs.

• These Platforms offers anentrepreneur and investor friendlyenvironment, which enables thelisting of SMEs from the unorganizedsector scattered throughout India,into a regulated and organized sector

MCQ’s

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1. The new regulations Sebi (Appointment of Administrator and Procedure for Refunding to the Investors) has

come into effect from:

a) 7th Sept. 2018

b) 3rd Oct. 2018

c) 1st Nov. 2018

d) None of the above

2. Sebi recently asked depository participants to inform on _________ basis about the average time taken by

them in dealing with requests of FPI registration?

a) monthly

b) quarterly

c) Half-yearly

d) yearly

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3. Primary Market Advisory Committee (PMAC) of SEBI is chaired by:

a) T V Mohandas Pai

b) Naryan Murthy

c) TK Vishwanathan

d) YV Reddy

4. Emerge is SME platform of:

a) BSE

b) NSE

c) OTCEI

d) None of the above

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ANSWERS1. B2. A3. A4. B

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SEBI Current Affairs - Oct. 2018

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Thank You! Happy Learning!

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