Monthly Archives: December 2014

Listing Agreement to Listing Regulations

SEBI has in its Board meeting held on 17th November, 2014 decided to convert the listing agreement with listed companies in the stock exchanges into a Listing Regulation. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2014 the salient features of which are given below:

(1) The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2014 (Listing Regulations), interalia,
will be comprehensive Regulation in respect of various types of listed securities. This Regulation would
consolidate and streamline the provisions of existing listing agreements thereby ensuring better enforceability. This
Regulation would be applicable for the following type of securities:-
(i) Specified Securities (includes equity and convertibles) – Listed on Main Board and SME Platform
(ii) Non-convertible Debt Securities
(iii) Non-Convertible Redeemable Preference Shares (NCRPS)
(iv) Indian Depository Receipts
(v) Securitised Debt Instruments
(vi) Units issued by Mutual Fund Schemes
(2) While the common obligations applicable to all listed entities have been enumerated at the beginning of the
Listing Regulations, obligations which are applicable to specific type of securities have been laid down in separate
chapters.
(3) The Listing Regulations have been sub-divided into three parts viz.,(a) substantive provisions incorporated
in the main body of Regulations; (b) procedural requirements in the form of Schedules to the Regulations; and (c)
various formats / forms of disclosures to be specified by SEBI through circular(s). Some of the important new
provisions in the Listing Regulations include ::
(i) The overarching principles for making disclosures & obligations.

(ii) Mandatory filing on Stock Exchanges through electronic platform.
(iii) Mandatory appointment of Company Secretary as compliance officer except for units of Mutual Funds listed
on Stock Exchanges.
(iv) Introduction of enabling provision for Annual Information Memorandum

(v) Mandatory registration in SCORES by all listed entities for redressal of investor grievances.
(vi) Mandatory for listed entities to co-operate with intermediaries registered with SEBI.
(vii) Converged provisions for specified securities (equity segment) listed on Main Board and SME Platform with
necessary carve-outs for SMEs.
(viii) Applicability of certain equity segment provisions, such as, submission of Form B (audit reports containing
modified opinion), transfer and transmission of securities, etc. to entities which have listed their Debt Securities
and/or NCRPS.
(ix) Necessity to execute a shortened version of Listing Agreement within six months of notification of these
regulations.
(4) In addition to the above, a number of changes which are in the nature of either providing clarity or
maintaining consistency or removal of redundancies have been carried out in the Listing Regulations. Such
changes include removal of dichotomy regarding utilization of issue proceeds, manner of dealing with unclaimed
shares, aligning connected provisions pertaining to disclosures on website and issuing advertisements, disclosures
in Annual Report, documents and information to be provided to holders of securities, terms and structure of
securities, and operational modalities in manner of review of audit reports with modified opinion, etc.
(5) There were certain provisions in the listing agreements related to issuance of securities and not in the nature
of continuous obligations, such as, 1% security deposit, allotment, refund, payment of interest on account of delay in
allotment / non-allotment, etc. They have been now incorporated in respective regulations, viz., ICDR Regulations,
ILDS Regulations, etc. Similarly, requirements which are in the nature of continuous disclosure and obligations have
been shifted and now incorporated in the Listing Regulations.

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Unclaimed Deposits/ Inoperative accounts in Banks

RBI has issued a circular dated 22nd August, 2008 giving detailed guidelines for treatment of “Unclaimed Deposits/ Inoperative accounts” in Banks. The copy of the circular can be found here i.e. http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=4430&Mode=0

Some of the salient guidelines are given below:

(i) Banks should make an annual review of accounts in which there are no operations (i.e. no credit or debit other than crediting of periodic interest or debiting of service charges) for more than one year. The banks may approach the customers and inform them in writing that there has been no operation in their accounts and ascertain the reasons for the same. In case the non operation in the account is due to shifting of the customers from the locality, they may be asked to provide the details of the new bank accounts to which the balance in the existing account could be transferred.

(ii) If the letters are returned undelivered, they may immediately be put on enquiry to find out the whereabouts of customers or their legal heirs in case they are deceased.

(iii) In case the whereabouts of the customers are not traceable, banks should consider contacting the persons who had introduced the account holder. They could also consider contacting the employer / or any other person whose details are available with them. They could also consider contacting the account holder telephonically in case his telephone number / Cell number has been furnished to the bank. In case of Non Resident accounts, the bank may also contact the account holders through e-mail and obtain their confirmation of the details of the account.

(iv) A savings as well as current account should be treated as inoperative / dormant if there are no transactions in the account for over a period of two years.

(v) In case any reply is given by the account holder giving the reasons for not operating the account, banks should continue classifying the same as an operative account for one more year within which period the account holder may be requested to operate the account. However, in case the account holder still does not operate the same during the extended period, banks should classify the same as inoperative account after the expiry of the extended period.

(vi) For the purpose of classifying an account as ‘inoperative’ both the type of  transactions i.e. debit as well as credit transactions induced at the instance of customers as well as third party should be considered. However, the service charges levied by the bank or interest credited by the bank should not be considered.
 
(vii) Further, the segregation of the inoperative accounts is from the point of view of reducing risk of frauds etc. However, the customer should not be inconvenienced in any way, just because his account has been rendered inoperative. The classification is there only to bring to the attention of dealing staff, the increased risk in the account. The transaction may be monitored at a higher level both from the point of view of preventing fraud and making a Suspicious Transactions Report. However, the entire process should remain un-noticeable by the customer.

(viii) Operation in such accounts may be allowed after due diligence as per risk category of the customer. Due diligence would mean ensuring genuineness of the transaction, verification of the signature and identity etc. However, it has to be ensured that the customer is not inconvenienced as a result of extra care taken by the bank.

(ix) There should not be any charge for activation of inoperative account.

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