Tag Archives: disclosures

disclosure format under insider trading code

SEBI has revised its disclosure formats under the SEBI (Prohibition of Insider Trading) Regulations, 2015 or the Insider Trading Code. The revised formats are given in the SEBI circular as per link below.


The disclosure formats are

Form D – disclosure on becoming a key managerial personnel/ director/ promoter/ member of the promoter group

Form C – continual disclosures

Form D – transactions by other connected persons as identified by the company.

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LODR – amendments

SEBI has vide its notification dated 8th October, 2020 amended the Listing Obligations and Disclosure Requirements Regulations 2015 as follows:

In Chapter V pertaining to obligations of a listed entity which has listed its non convertible debt securities or non convertible redeemable preference shares or both.

Regulation 54(1) pertaining to asset cover has been amended as follows:

  1. [(1) In respect of its listed non-convertible debt securities, the listed entity shall maintain hundred per cent. asset cover or asset cover as per the terms of offer document/Information Memorandum and/or Debenture Trust Deed, sufficient to discharge the principal amount at all times for the non-convertible debt securities issued.]

In earlier version, the wordings highlighted above were not there. It has been added vide this amendment.

Regulation 54(3) has been omitted. Prior to its omission, reg 54(3) read as follows:

“(3) The requirement specified in sub-regulation (1), shall not be applicable in case of unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective

So now even unsecured debt securities will be required to keep asset cover as per reg 54(1) ibid.

Regulation 56 pertaining to documentation and intimation to debenture trustees. New clause has been inserted in reg 56(1)(c) as follows, after existing sub-clause (iii).

1[(iv) all covenants of the issue (including side letters, accelerated payment clause, etc.)]

Reg 56(1)(c) pertains to intimations to be made to the debenture trustee by the issuer – intimations regarding revisions in rating, default in timely payment of interest or redemption or both in case of non-convertible securities or failure to create charge on the assets. Now one more clause has been added as above for making intimation to the debenture trustees.

Reg 56(1)(d) has been replaced as follows:

“(d) a half-yearly certificate regarding maintenance of hundred
percent asset cover or asset cover as per the terms of offer document/
Information Memorandum and/or Debenture Trust Deed, including
compliance with all the covenants, in respect of listed non-convertible
debt securities, by the statutory auditor, along with the half-yearly
financial results:
Provided that the submission of half yearly certificate is not
applicable where bonds are secured by a Government guarantee.”

Earlier this certificate could have been issued by a practising CA or CS. Now that is one opportunity lost for us.

In Schedule III, in part A, a new clause has been added. Schedule III pertains to disclosure of events or information in respect of specified securities under regulation 30.

17. Initiation of Forensic audit: In case of initiation of forensic audit,
(by whatever name called), the following disclosures shall be made
to the stock exchanges by listed entities:
a) The fact of initiation of forensic audit along-with name of
entity initiating the audit and reasons for the same, if available;
b) Final forensic audit report (other than for forensic audit
initiated by regulatory / enforcement agencies) on receipt by the
listed entity along with comments of the management, if any.


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rights issues

SEBI press release dated 23rd September, 2020 streamlining the eligibility criteria for a listed company to come out with a rights issue and truncated disclosure requirements, doing away with duplication of information, already in the public domain.

SEBI has decided to amend SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 to rationalise eligibility criteria and disclosure requirements for Rights Issues’ with an objective to make the fund raising through this route, easier, faster and cost effective.
The key amendments include:

  1. Issuer shall be eligible to make truncated disclosures in terms of Part B :
    i. where it has been filing periodic reports/ statements/ information in
    compliance with Listing Regulations as applicable, for last one year instead of last three years as required earlier.
    ii. where three years have passed after change in management pursuant to acquisition of control or Listing consequent to a scheme of arrangement.
  2. All other issuers not satisfying Part B eligibility conditions shall make disclosures in terms of new set of proposed disclosures i.e. Part B-1. Part B-1 disclosures would be more detailed than Part B, but truncated compared to Part A, which is meant for IPO/FPO offer document.
  3. Disclosure requirements under Part B have been rationalized to avoid duplication of information in letter of offer, especially the information which is already available in public domain and is disclosed by the companies in compliance with the disclosure requirements under SEBI Listing regulations.
  4. Threshold increased from Rs. 10 crores to Rs 50 crores, for filing requirement of Rights issue draft letter of offer with the Board for its observations.
  5. Mandatory 90% minimum subscription criteria for Rights Issue shall not be applicable to those issuers where object of the issue involves financing other than financing of capital expenditure for a project, provided that the promoters and promoter group of the issuer undertake to subscribe fully to their portion of rights entitlement.
  6. Issuer shall be eligible to make Fast Track Rights Issue, in case of pending showcause notices in respect to adjudication, prosecution proceedings and audit qualification, provided that necessary disclosures along with potential adverse impact on the issuer are made in the letter of offer.
  7. The amendments will be effective from the date it is notified in the Gazette.


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portfolio managers

SEBI has vide its circular dated 13th February 2020 revised its guidelines for Portfolio Managers.


Gist of the revisions are given below:

  • Date of circular was on 13th Feb, 2020.
  • It is relating to guidelines issued by SEBI that are mandatory required to be followed by Portfolio Managers.
  • The provisions of this Circular shall be applicable with effect from May 01, 2020.
  • The guidelines are issued by SEBI based on the recommendations of a Working Group and also some inputs from public consultation.
  • SEBI has reviewed the framework for regulation of Portfolio Managers and the SEBI (Portfolio Managers) Regulation, 2020 has been notified on 16th Jan, 2020.
  • As per the circular there has been modification made in Fees and Charges which are charged by Portfolio Managers and are mentioned below:-
    • Regulation 22 (11) of the PMS Regulation states that no advance fees shall be charged by the Portfolio Managers either directly or indirectly, to the clients.
    • Also brokerage at actual cost shall be charged as expense to clients and not any other costs shall be added.
    • It is to be noted that Operating expenses excluding brokerage , over and above the fees charged by Portfolio Managers for the service shall not go beyond 0.50% per annum of the clients daily Asset Under Management.
    • In case the client wishes to redeem its investments in full or in part before the agreed period of time than in such case the exit load shall be charged as under:-
      • In the 1st year of investment = maximum 3% of amount redeem.
      • In the 2nd year of investment = maximum 2% of amount redeem.
      • In the 3rd year of investment = maximum 1% of amount redeem.
      • After the period of 3 years from the date of investment, no exit load shall be charged.
  • Also the charges for all the transactions in a financial year including broking, demat, custody, etc. incurred by self or by associates shall not exceed 20% per service.
  • In case of direct on-boarding of clients by Portfolio Managers the following points need to be kept in mind which are mentioned as below:-
    • In case of distribution of services the Portfolio Managers shall provide an option to client to be on-boarded directly without involving any intermediary.
    • Portfolio Managers shall clearly disclose in its Disclosure Documents and also on its website about the option for direct on-boarding.
    • It is to be noted that only statutory charges shall be charged in case of direct on-boarding of clients.
  • All the information with respect to Investment Approaches offered by Portfolio Managers shall be uniform across all types of regulatory reporting, client reporting, disclosure document, marketing materials and any such document which relates to services offered by Portfolio Managers.
  • Any description of investment  approach provided by Portfolio      Managers shall, includes the following:-
    • investment objective
    • description of types of securities e.g. equity or debt, listed or unlisted, convertible instruments, etc.
    • basis of  selection  of  such  types  of  securities  as  part  of  the investment approach
    • allocation of portfolio across types of securities(v)appropriate benchmark  to  compare  performance  and  basis  for choice of benchmark
    • indicative tenure or investment horizon
    • risks associated with the investment approach
    • other salient features, if any.
  • Portfolio Managers shall report to SEBI on periodical basis as per the provisions of circular dated on 18th Nov, 2003 which is relating to ‘Improvement in Corporate Governance’ that is on annual basis.
  • SEBI has also clarified that with effect from financial year 2019-20 Portfolio Managers is required to submit the following information to the Board:-
    • A certificate by CA duly certifying the net worth as on March 31st every year based on audited account within 6 months from the end of financial year.
    • Also a certificate of compliance with PMS Regulations and circulars issued thereunder, duly signed by the Principal Officer within 60 days of end of each financial year.
  • Further, Portfolio Managers shall submit a monthly report regarding their activities on SEBI Intermediaries Portal within 7 working days of the end of each month as per Annexure A.
  • Also Portfolio Managers shall furnish a report in the format provided at Annexure B to their clients on a quarterly basis.
  • According to the Regulation 22 (4) (e) of PMS Regulations, it is clarified that the Portfolio Managers shall:-
    • Consider all cash holdings and investments in liquid funds, for calculation of performance.
    • Report performance data net of all fees and all expenses (including taxes).
    • Clearly disclose any change in investment approach that may impact the performance of client portfolio, in the marketing material.
    • Ensure that performance reported in all marketing material and website of the Portfolio Manager is the same as that reported to SEBI.
    • Ensure that  the  aggregate  performance of the  Portfolio  Manager (firm-level performance) reported in any document shall be same as the  combined  performance  of  all  the  portfolios  managed  by  the Portfolio Manager.
    • Provide a disclaimer in all marketing material that the performance related information provided therein is not verified by SEBI.
  • The performance data of Portfolio Managers shall be audited annually and the same shall be reported to SEBI within 60 days of end of each financial year. Also the said report shall be certified by Manager, Partners of the Portfolio Managers.
  • Further to Regulation 23 (10) of PMS Regulations, it is clarified that Portfolio Managers shall:-
  • Utilize services of only such distributors who have a valid AMFI Registration Number or have cleared NISM-Series-V-A exam.
  • Pay fees or commission to distributors only on trial-basis. Further, any fees or commission paid shall be only from the fees received by Portfolio Managers.
  • Ensure that prospective clients are informed about the fees or commission to be earned by the distributors for on-boarding them to specific investment approaches.
  • Ensure that distributors abide by the Code of Conduct as specified in Annexure C.
  • Have mechanism to independently verify the compliance of its distributors with the Code of Conduct.
  • Ensure that, within 15 days from the end of every financial year, a self-certification is also received from distributors with regard to compliance with Code of conduct.


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