Tag Archives: depositories

inter operable platform for MF investors

SEBI has vide its circular dated 26th July, 2021 mandated the setting up of an inter operable platform for the mutual fund investors, where in one site they are able to view everything related to their mutual fund investments as well carry out transactions therein, instead of navigating to multiple sites. Salient features are :

  1. RTAs shall implement standardized practices, system interoperability amongst themselves to jointly develop a common industry wide platform that will deliver an integrated, harmonized, elevated experience to the investors across the
    industry. AMCs and Depositories shall facilitate the RTAs for development of the proposed platform.
  2. The aforesaid platform shall, inter alia in phases, enable a user-friendly interface for investors for execution of mutual fund transactions viz. purchase, redemption, switch etc., initiation and tracking of service requests viz. change of email id / contact number / bank account details etc., initiation and tracking of queries and complaints, access investment related reports viz. mutual fund holdings (both in demat and standard Statement of Account), transactions reports (including historic transactions), capital gains/loss report, details of unclaimed dividend/redemption etc. Through this platform, investors will be able to access these services for all Mutual Funds in an integrated manner. In this regard,
    AMCs, RTAs and Depositories shall take necessary measures to provide data via APIs on a real time basis to the proposed platform. Additionally, RTAs and Depositories shall also share their respective data feeds between themselves for generation of investment related reports.
  3. The platform may also over time, provide services to the distributors, registered investment advisors, AMCs, Stock Exchange platforms and digital platforms for transacting in mutual funds to further augment ease of investing and servicing of investors through the above stakeholders in consultation with SEBI.
  4. AMCs, RTAs and Depositories shall review and agree to harmonize the processes across the industry to provide a single-window, integrated, simplified investment and service experience for the investors.
  5. AMCs, RTAs, and Depositories shall adopt the data definitions and standards as provided / recommended by SEBI for data exchange amongst various participants.
  6. The Platform should be scalable with robust cyber security protocols and supported through an API-based architecture. In this regard, the platform shall adopt the Cyber Security and Cyber Resilience framework specified by SEBI from time to time to “MIIs” (Market Infrastructure Institutions such as Stock Exchanges, Depositories and Clearing Corporations) and “Qualified RTAs” (QRTAs). Further, on request basis, APIs could be exposed to other industry
    stakeholders such as distributors, registered investment advisors, Stock Exchange platforms and digital platforms etc. with due approval of the concerned Mutual Fund on mutually agreed terms.
  7. The RTAs are jointly and severally responsible for compliance with all the applicable regulations including system audit and cyber security audit. Further, RTAs shall ensure that the platform complies with the guidelines for Business
    Continuity Plan (BCP) and Disaster Recovery (DR) specified by SEBI from time to time to “MIIs”.
  8. All the stakeholders are advised to collaborate and work together towards the development and implementation of the proposed investor-friendly platform.
  9. AMCs and Depositories shall facilitate and RTAs shall make the aforesaid platform operational in a phased manner (starting with non-financial transactions) and shall be fully operational by December 31, 2021.
  10. AMCs, RTAs, Depositories, AMFI and key stakeholders are advised to create awareness about this initiative amongst the investors.
  11. Any RTA providing its services to Mutual Fund(s), subsequent to issuance of this circular, shall follow the guidelines specified in this circular or amendments thereto as may be intimated by SEBI from time to time.

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purchase of minority shareholdings

MCA has vide its notification dated 17th December, 2020 amended the Companies (Compromises, Arrangements & Amalgamations) Rules, 2016 as follows. It has introduced a new rule 26A specifying the procedures to be followed in the case of purchase of minority shareholding held in demat form. Read on.

  1. The company shall within two weeks of the receipt of amount equal to the price of shares to be acquired by the acquirer verify details of the shareholders holding shares in demat form;
  2. After verification as above, the company has to send notice to the shareholder (via speedpost/ courier/ e-mail/ registered post) informing him of the purchase of his shares in the company and giving a one month cut off (from the date of sending the notice) after which the shares shall be debited from his demat account and credited to the demat account of the company (designated demat account of the company);
  3. The notice as above should also be published in two widely circulated newspapers in the district where the registered office of the company is situated and also uploaded on the website of the company, if any.
  4. The company has to inform the depository after the notice has been published and also give some undertakings such as : corporate action under section 236, that the minority shareholders have been intimated, that the minority shareholders shall be paid by the company immediately after completion of corporate action and that any dispute or complaints shall be settled by the company;
  5. The Board has to authorise the company secretary or any other official for effecting transfer of shares through corporate action, to make necessary disclosures to the depository and to submit whatever documents required in this regard;
  6. The depository, upon receipt of the information as above from the company, make necessary transfer of shares from the demat account of the minority shareholder to the designated demat account of the company, unless some shareholders have made direct transaction with the acquirer in this regard. Post that they have to intimate the company accordingly;
  7. Once the intimation has been received by the company from the depository as above, they shall immediately disburse the amount into the bank account of the minority shareholders. The stamp duty on the transfers as above, has to be paid by the company itself;
  8. After the payment is made as above to the minority shareholders, the company shall intimate the same to the depository who shall then transfer the shares from the designated demat account of the company to the demat account of the acquirer;
  9. The above rules shall not apply if there is a specific order of the court or tribunal staying the transfer of any shares or payment of dividend or where the shares are pledged or hypothecated – in such case the shares shall not be transferred to the designated demat account of the company.
  10. Earlier in the definition clause “corporate action” has been defined to mean any action taken by the company relating to transfer of shares and all benefits accruing from transfer of such shares viz. bonus shares, split, consolidation, fraction shares and rights issue to the acquirer.
  11. The copy of the said notification can be found at the MCA site viz. http://www.mca.gov.in

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e-voting by listed entities – streamlining

SEBI circular dated 9th December, 2020 wherein they have sought to streamline the e-voting process by listed entities, so that more and more public shareholders start voting. Presently, the voting by public shareholders in the e-voting process is negligible because of the cumbersome formalities with respect to registering at various depositories and remembering the passwords etc. Read on.

  1. Under Regulation 44 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, listed entities are required to provide remote evoting facility to its shareholders, in respect of all shareholders’ resolutions. However, it has been observed that the participation by the public non-institutional shareholders/retail shareholders is at a negligible level.
  2. Currently, there are multiple e-voting service providers (ESPs) providing e-voting facility to listed entities in India. This necessitates registration on various ESPs and maintenance of multiple user IDs and passwords by the shareholders.
  3. In order to increase the efficiency of the voting process, pursuant to a public consultation, it has been decided to enable e-voting to all the demat account holders, by way of a single login credential, through their demat accounts/ websites of Depositories/ Depository Participants. Demat account holders would be able to cast their vote without having to register again with the ESPs, thereby, not only facilitating seamless authentication but also enhancing ease and convenience of participating in e-voting process. The same shall be implemented in a phased manner as under:
    Phase – 1
    Following process for e-voting shall be implemented within 6 months of the date of the circular.
    3.1. Direct registration with Depositories – Shareholders can register directly with the depository. Shareholders would be able to access the e-voting page of various ESPs through the websites of the Depositories without further authentication by ESPs for participating in the e-voting process.
    OR
    3.2. Through Demat Accounts with Depository Participants – Demat account holders will have the option of accessing various ESP portals directly from their demat accounts. They would be routed to the webpage of the respective Depositories from their demat accounts, which in turn would enable access to the e-voting portals of various ESPs without further authentication by ESPs for participating in the e-voting process.
  4. The authentication of shareholders would happen at the depository level and ESPs shall allow the demat account holders to cast their vote based on the validation carried out by the Depository.
  5. Depository shall send a confirmatory SMS to the shareholders that the vote has been cast based on the confirmation received from the ESP.
  6. The listed entity shall provide the details of the upcoming AGMs requiring voting to the Depository. The depository shall send SMS/email alerts in this regard, to the demat account holders, atleast 2 days prior to the date of the commencement of e-voting.
    Phase – 2
  7. In order to further enhance the convenience and security of the e-voting system, the depository shall validate the demat account holder through a One Time Password (OTP) verification process as under.
    6.1 Direct registration with Depositories – Depositories shall allow login through registered Mobile number / E-mail based OTP verification as an alternate to login through username and password.
    6.2 Through Demat Accounts with Depository Participants – A second factor authentication using Mobile / E-mail based OTP shall be introduced before the demat account holders can access the websites of the Depositories through their demat accounts. The above shall be implemented within 12 months from the completion of the process in phase 1.
    7 Depository may advise the demat account holders to update their mobile number and email ID in order to access the e-voting facility.
    8 Depositories shall establish a dedicated helpline to resolve technical difficulties faced by shareholders relating to the e-voting facility. Further, the listed company shall ensure that the ESPs engaged by them also provide a dedicated helpline in this regard.
    9 In order to enable better deliberation and decision making by the shareholders while casting their votes, ESP Portals shall provide specific weblinks to the following:
     disclosures by the company on the websites of the stock exchanges
     report on the websites of the proxy advisors.

    Applicability
    10 The aforementioned facility shall be available to all individual shareholders holding the securities in demat mode.
    11 ESPs may continue to provide the facility of e-voting as per the existing process to all physical shareholders and shareholders other than individuals viz. institutions/ corporate shareholders.
    12 Depositories and Exchanges are advised to bring the circular to the notice of its Depository
    Participants and listed companies respectively.
    13 All listed companies are advised to notify the above process available to demat account holders for e-voting in the notice sent to the shareholders.
  8. https://www.sebi.gov.in/legal/circulars/dec-2020/e-voting-facility-provided-by-listed-entities_48390.html

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transfer & demat of re-lodged physical shares

SEBI circular dated 2nd December, 2020 on the subject, which is self explanatory:

1. SEBI, vide circular no. SEBI/HO/MIRSD/RTAMB/CIR/P/2020/166 dated September 07, 2020, has fixed March 31, 2021 as the cut-off date for re-lodgment of transfer requests and has stipulated that such transferred shares shall be issued only in demat mode.

2. In this regard the operational guidelines for crediting the transferred shares into the respective demat account of the investor, with inputs from stakeholders, are as under;

i. Guidelines to credit the transferred physical shares in demat mode:

a. Subsequent to processing of the re-lodged transfer request, the RTA shall retain the physical shares and intimate the investor (transferee) about the execution of transfer through Letter of Confirmation. This letter shall be sent through Registered / Speed Post or through email with digitally signed letter and shall, inter-alia, contain details of endorsement, shares, folio of investor (required on Demat request form) as available on the physical shares.

b. The investor shall submit the demat request, within 90 days of issue of Letter of Confirmation, to Depository participant (DP) along with the Letter of Confirmation. RTA shall also issue a reminder at the end of 60 days of issue of Letter of Confirmation, informing the investor to submit the demat request as above.

c. Depository Participant will process the Demat Request on the basis of Letter of Confirmation, as this letter is a confirmation of holding of physical shares on behalf of the investor by RTA.

d. The suggested format of the Letter of Confirmation is given at Annexure – A.

ii. In case of the shares that are required to be locked-in as per the SEBI Circular SEBI/ HO/ MIRSD/ DOS3/ CIR/P/2018/139, dated November 06, 2018, the RTA while approving / confirming the demat request, shall also incorporate / intimate the Depository about the lock-in and its period. Such shares shall be in lock-in demat mode for 6 months from the date of registration of transfer.

iii. In case of non-receipt of demat request from the investor within 90 days of the date of Letter of Confirmation, the shares will be credited to Suspense Escrow Demat Account of the Company.

3. Depositories shall;

a) make necessary amendments to the relevant byelaws, rules and regulations for the implementation of the above directions, as may be applicable; and

b) bring the provisions of this circular to the notice of their participants and also disseminate the same on their websites.

https://www.sebi.gov.in/legal/circulars/dec-2020/operational-guidelines-for-transfer-and-dematerialization-of-re-lodged-physical-shares_48336.html

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POA – stock brokers

SEBI has issued an important circular dated 27th August, 2020 giving clarifications regarding execution of a power of attorney by clients in favour of stock brokers and depository participants. Gist of the circular is given below:

  1. SEBI, vide circular no. CIR/MRD/DMS/13/2010 dated April 23, 2010, issued
    Guidelines for execution of Power of Attorney (PoA) by the client favouring Stock Broker / Stock Broker and Depository Participant (hereinafter referred to as “Guidelines”). Certain clarifications were issued later vide circular no. CIR/MRD/DMS/28/2010 dated August 31, 2010.
  2. Paragraph 5 of the circular dated April 23, 2010, specifies the following:
    “Standardizing the norms for PoA must not be construed as making the PoA a condition precedent or mandatory for availing broking or depository participant services. PoA is merely an option available to the client for instructing his broker or depository participant to facilitate the delivery of shares and pay-in/pay-out of funds etc. No stock broker or depository participant shall deny services to the client if the client refuses to execute a PoA in their favour.”
  3. Further, paragraph 12 – 20 of the Guidelines in SEBI circular dated April 23, 2010, also specifies that the PoA shall not facilitate the stock broker to do the following:
    3.1.Transfer of securities for off market trades.
    3.2.Transfer of funds from the bank account(s) of the Clients for trades executed by the clients through another stock broker.
    3.3.Open a broking / trading facility with any stock broker or for opening a Beneficial Owner account with any Depository Participant.
    3.4.Execute trades in the name of the client(s) without the client(s) consent.
    3.5.Prohibit issue of Delivery Instruction Slips (DIS) to beneficial owner (client).
    3.6.Prohibit client(s) from operating the account.
    3.7.Merging of balances (dues) under various accounts to nullify debit in any other account.
    3.8.Open an email ID / email account on behalf of the client(s) for receiving statement of transactions, bills, contract notes etc. from stock broker /depository participant.
    3.9.Renounce liability for any loss or claim that may arise due to any blocking of funds that may be erroneously instructed by the stock broker to the designated bank.
  4. However, it has been observed that PoA is invariably obtained from the investors as part of the KYC and account opening process. Such PoA executed by clients has further found to have been misused by the stock brokers by taking authorization even for activities as specified in paragraph 3 above. In this regard, it is reiterated that:
    4.1.PoA is optional and should not be insisted upon by the stock broker / stock broker depository participant for opening of the client account.
    4.2.PoA executed in favour of stock broker / stock broker depository participant by the client shall be utilized
    4.2.1.For transfer of securities held in the beneficial owner accounts of the client towards Stock Exchange related deliveries / settlement obligations arising out of trades executed by clients on the Stock Exchange through the same stock broker.
    4.2.2.For pledging / re-pledging of securities in favour of trading member (TM) / clearing member (CM) for the purpose of meeting margin requirements of the clients in connection with the trades executed by the clients on the Stock Exchange.
    4.2.3.For the limited purposes as specified in paragraph 1(iii) and 2 of the
    Guidelines.
    4.3.Paragraph 1(i) and 1(ii) of the Guidelines stands modified in accordance with paragraph 4.2.1 and 4.2.2 above. Stock Exchanges and Depositories shall ensure that PoA is not used by TM/CM/DPs for any purpose other than as specified above and in SEBI circulars dated April 23, 2010 read with SEBI circular dated August 31, 2010.
  5. It has also been decided that all off-market transfer of securities shall be permitted by the Depositories only by execution of Physical Delivery Instruction Slip (DIS) duly signed by the client himself or by way of electronic DIS. The Depositories shall also put in place a system of obtaining client’s consent through One Time Password (OTP) for such off market transfer of securities from client’s demat account.
  6. All other provisions specified in SEBI circular dated April 23, 2010 read with SEBI circular dated August 31, 2010 shall continue to remain applicable. The circular shall be applicable with effect from November 01, 2020.
  7. Stock Exchanges and Depositories are directed to
    7.1. make necessary amendments to the relevant Bye-laws, Rules and
    Regulations for the implementation of the above decision;
    7.2. bring the provisions of this circular to the notice of their members /
    participants and also disseminate the same on their websites; and
    7.3. communicate to SEBI, the status of implementation of the provisions of this circular in their monthly report.

https://www.sebi.gov.in/legal/circulars/aug-2020/execution-of-power-of-attorney-poa-by-the-client-in-favour-of-the-stock-broker-stock-broker-and-depository-participant_47423.html

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global depository receipts

MCA has amended the Companies (Global Depository Receipts), 2014 vide its amendment dated 13th February, 2020. The salient features of the amendment are as follows:

Note on Companies (Issue of Global Depository Receipts) Amendment Rules, 2020:-

  • Date of notification was on 13th Feb, 2020.
  • It shall come into force on the date of their publication in Official Gazette which means as of now it is not in force.
  • Central Government has exercise its powers as provided in section 41 read with section 469 of the Companies Act , 2013 in order to amend the Companies (Issue of Global Depository Receipts) Amendment Rules, 2014.
  • The amended rules may be called as Companies (Issue of Global Depository Receipts) Amendment Rules, 2020.
  • In Companies (Issue of Global Depository Receipts) Amendment Rules, 2014 the words bracket and figures “Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Scheme, 1993” shall be replaced by the words and figures “Depository Receipt Scheme, 1993”.
  • Also in sub rule (1) after the clause (a) which is relating to definitions, the new clause shall be inserted that is: (aa) “overseas depository” or “overseas depository bank” shall mean “foreign depository” as defined in the scheme.
  • Earlier, rule 5 sub rule (1) pertains to manner and form of depository receipts and states that the depository receipts can be issued by way of public offering or private placement or in any other manner which is prevailing abroad and may be listed or traded in an overseas listing or trading platform. But after the amendment in the sais sub rule now the depository receipts can be issued by way of public offering or private placement or in any other manner prevalent in the concerned jurisdiction and may be listed or traded on the listing or trading platform in the concerned jurisdiction only.
  • Also, earlier in sub rule (3) states that the underlying shares held by a domestic custodian bank shall be allotted in the name of the overseas depository bank and against such shares, the depository receipts shall be issued by the overseas depository bank abroad. It is to be noted that after the post amendment the word ‘abroad’ shall be omitted. This is just a technical amendment to remove the word “abroad” because the word “overseas” is already appearing there.
  • Earlier, rule 7, which pertains to proceeds of issue and  states that the proceeds of issue of depository receipts shall either be remitted to a bank account in India or in Indian Bank operating abroad or in any foreign bank which is a schedule bank as per RBI act, 1934 and having operations in India. Also such foreign bank shall take the responsibility of furnishing all the information as may be required and the proceeds of the sale shall be credited to the respective bank account of the shareholders. After the amendment in the said rule now a new proviso shall be inserted which states that proceeds of issue of depository receipts may be remitted in an IBU and the same shall be utilized as per the directions issued by RBI from time to time.
  • Rule 9 sub rule(1) has also been amended which earlier pertains to, non applicability of certain provisions of the Act and states that the provisions of the act as well of the rules issued with respect to public issue of shares or debentures shall not apply upon issue of depository receipts abroad. But as of now after the amendment the word “abroad “ shall be deleted which means that the provisions of the act as well of the rules issued with respect to public issue of shares or debentures shall not apply upon  issue of depository receipts. This is only a technical amendment to rectify drafting errors.

 

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depositories

Decisions at SEBI board meeting dated 17th February, 2020

Amendment to SEBI (Depositories and Participants) Regulations, 2018 to enable re-pledge of securities pledged in dematerialized form
The Board approved insertion of a suitable Explanation to Regulation 79 (Manner of
creating pledge in Depository) under SEBI (Depositories and Participants) Regulations, 2018, that the word “pledge” shall include re-pledge of securities for margin and / or settlement obligations of the client or such other purposes as specified by the Board from time to time.

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misuse of clients’ securities

SEBI press release dated 13th february 2020

In the recent past years, it has been observed that some brokers have misused clients’ securities received as collateral to meet their own settlement obligation or obligations of other clients.  Some brokers have also misused clients’ securities by pledging them with the banks and NBFCs to raise funds for their own use. Though the Depositories Act provides for acceptance of client securities as collateral by way of pledge, the collateral of securities is accepted by way of title transfer of securities by brokers.  The client providing collateral in the form of securities needs to transfer his securities in the name of the broker and once the securities move out of the demat account of the client, it is not possible for him to keep a track of use/ misuse of those securities by the broker.

A few brokers have been declared defaulter by the Exchange not on account of failure to meet settlement obligation but in failing to meet liabilities/ dues to the clients.  The available assets of the broker were found short to meet the clients’ funds and securities obligations.  In order to prevent the misuse of clients’ securities by broker, SEBI has taken a number of policy measures including laying down early warning mechanism to detect diversion of clients’ funds and securities, restricting broker to pledge clients’ securities even with the consent of the client, securities to be transferred to Client account or Client Unpaid Securities Account (CUSA) within 24 hours of payout, mapping of Unique Client Code with demat account of the client to detect diversion of payout of securities.  SEBI has also directed Clearing Corporations to share client level pay-in and pay-out obligations with Depositories, and Depositories are required to check the corresponding debit or credit in the demat account of client and report mismatches to the Exchanges. This has detected the diversion of clients’ securities received in payout.

SEBI has developed an in – house online system by which it would be able to prepare client level securities holding register of the brokers. SEBI collects the details of the clients’ securities submitted in weekly report filed by brokers with the Exchanges and updates the same with trades conducted in the accounts of said clients using the data available with SEBI in DWBIS as well as data provided by Exchanges, Clearing Corporations and Depositories pertaining to auction trades, corporate actions, SLBM transfers, off market trades etc. The securities holding balance computed is matched with the actual clients’ securities holding in the demat account and submission made by the broker for the next day. Any mismatch in data is flagged as an alert for Exchanges.

As such, SEBI has developed the in – house capabilities to online track the movement of client securities collected by broker as collateral and raise alerts with Exchanges if diversion of clients’ securities is noticed. These reports are being generated by SEBI on a weekly basis and three such mismatch reports have already been forwarded to Exchanges for reconciliation with members.  This system is likely to timely detect the misuse of clients’ securities collected by brokers as collateral or received in pay-out of securities.

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Compulsory demat – for unlisted public companies

MCA has vide its notification dated 10th September, 2018 mandated that with effect from 2nd October, 2018
1) every unlisted public company shall issue its shares only in dematerialised form;
2) facilitate dematerialisation of all its existing securities;
3) shall make necessary application to the depository in this regard;
4) shall secure International Security Identification Number (ISIN) for each type of security and inform its security holders accordingly;
5) shall make timely payment of fees to the Depository and Registrar & Share Transfer Agent (RTA) in accordance with tripartite agreement into between them;
6) shall maintain security deposit of not less than two years’ with the Depository & RTA in such form as may be agreed between the parties;
7) shall comply with the regulations or guidelines or circulars or instructions, if any, issued by SEBI w.r.t dematerialisation of securities of unlisted public companies;
8) shall submit a half yearly audit report u/r 55 of SEBI (Depositories & Participants) Regulations, 2014 to the ROC.
Every shareholder of an unlisted public limited company, shall with effect from 2nd October, 2018 shall
1) get his/her/ its securities dematerialsed before transfer
2) who subscribes to any securities after the aforesaid date, shall ensure that his securities are dematerialised.
The grievances of a security holder of an unlisted public company shall be filed before the Investor Education & Protection Fund. The IEPF Authority is empowered to initiate action against any unlisted public company, depository, RTA.

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Monitoring of foreign investment limits in listed Indian companies

SEBI circular dated 5th April, 2018

1. Foreign Investment in India is regulated in terms of clause (b) of sub-section 3 of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (FEMA) read with Foreign Exchange Management (Transfer or Issue of a Security by a Person resident Outside India) Regulations, 2017 issued vide Notification No. FEMA 20(R)/2017-RB dated November 7, 2017. FEMA prescribes the various foreign investment limits in listed Indian companies. These include the aggregate FPI limit, the aggregate NRI limit and the sectoral cap. The RBI Master Direction (FED Master Direction No. 11/2017-18) dated January 04, 2018 provides a compilation of the instructions issued on Foreign Investment in India and its related aspects under FEMA.

2. As per FEMA, the onus of compliance with the various foreign investment limits rests on the Indian company. In order to facilitate the listed Indian companies to ensure compliance with the various foreign investment limits, SEBI in consultation with RBI has decided to put in place a new system for monitoring the foreign investment limits. The architecture of the new system has been explained in Annexure A.

3. The depositories (NSDL and CDSL) shall put in place the necessary infrastructure and IT systems for operationalizing the monitoring mechanism described at Annexure A. The Stock Exchanges (BSE, NSE and MSEI) shall also put in place the necessary infrastructure and IT systems for disseminating information on the available investment headroom in respect of listed Indian companies.

4. The depositories shall issue the necessary circulars and guidelines for collecting data on foreign investment from listed companies. The system for collecting this data from the companies shall go live on the date of the issuance of this circular. The companies shall provide the necessary data (details of which have been mentioned in Annexure A) to the depositories latest by April 30, 2018.

5. The new system for monitoring foreign investment limits in listed Indian companies shall be made operational on May 01, 2018. The existing mechanism for monitoring the foreign investment limits shall be done away with once the new system is operationalized. RBI shall issue the necessary guidelines in this regard.

This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992.

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Single Regn for Depository Participants

SEBI has issued circular dated 30th December, 2014 outlining single registration for depository participants.

The gist of the circular and the proposed amendments in the regulations are as follows:

As per the amendment, the existing requirement of obtaining certificate of initial registration to act as a participant and subsequently permanent registration to continue to act as a participant for each depository has been done away with.
Henceforth, one certificate of initial registration and subsequently permanent registration through any depository shall be required after commencement of the Securities and Exchange Board of India (Depositories and Participants) (Amendment)
Regulations, 2014.
For the purpose of implementing the above registration requirements, the following
guidelines are being issued:
a. If a new entity desires to act as a participant in any of the depository, then the entity shall apply to SEBI for certificate of initial registration through the concerned depository in the manner prescribed in the DP Regulations.
b. If an entity has been granted a certificate of registration to act as a participant through one depository and wishes to act as a participant with the other depository then it shall directly apply to the concerned depository for approval in the manner
as prescribed in the DP Regulations. The concerned depository, on receipt of the application, may grant approval to the entity after exercising due diligence and on being satisfied about the compliance of all relevant eligibility requirements
including the following:
i. The applicant, its directors, proprietor, partners and associates satisfy the Fit and Proper Criteria as defined in the SEBI (Intermediaries) Regulations, 2008;
ii. The applicant has taken satisfactory corrective steps to rectify the deficiencies or irregularities observed in the past inspections or in case of actions initiated/ taken by SEBI/ depository(s) or other regulators. The depository may also
seek details whether the Board of the applicant is satisfied about the steps taken. They may also carry out inspection, wherever considered appropriate;
iii. Recovery of all pending fees/ dues payable to SEBI and depository; and
iv. payment of registration fees as prescribed in the DP Regulations.
The depositories shall report to SEBI about the approval as stated above on a monthly basis.
c. The participant shall apply to SEBI for permanent registration through any of the depositories in which it is acting as a participant as per the DP Regulations.
d. The participants shall continue to pay the applicable annual fees and registration fees as specified in Part A of Second Schedule in the manner specified in Part B thereof w.r.t. their respective depository(ies), as the case may be.

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