vg study hub securities laws - amendments cs sanjeev sapra

VG Study Hub Securities Laws - Amendments CS Sanjeev Sapra

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,


(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.


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


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.


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;


(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.


COLLECTIVE INVESTMENT SCHEME (CIS)

New section inserted


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


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.


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;


(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)


EMPLOYEE STOCK OPTION PLAN (ESOP)

Regulation – 27A (new Regulation)


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 –


(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.


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 .


(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‖.


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;


(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.


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.


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.


(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.


(b) The proceeds of the issue shall also be monitored by the Audit Committee till utilization of

the proceeds.


The allotment made shall be locked-in for a period of 3 years from the last date of

trading approval.


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


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))


(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))


(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.


Risk Management Committee

(New Insertion IN Reg. 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


(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


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.


(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.


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;


(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


(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.


(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


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.


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.


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


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.


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.


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;


(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)


(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.)


(new insertion) Regulation – 32A (same as stated in above regulations)


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