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♦ Transfer of shares in physical form to be stopped from April 1, 2019
♦ Investment by Foreign Portfolio Investors (FPI) in Debt – Review
♦ SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2019
♦ SEBI: Enhanced disclosure in case of listed debt securities
SEBI has recently amended relevant provisions of SEBI (Listing Obligations and Disclosure Requirements) (Fourth Amendment) Regulations,2018 to disallow listed companies from accepting request for transfer of securities which are held in physical form with effect from April 1,2019. The shareholders, who continue to hold shares and other types of securities of listed companies in physical form even after this date, will not be able to lodge the shares with the company for further transfer. They will need to convert them to demat form compulsorily if they wish to effect any transfer. Only the requests for transmission and transposition of securities in physical form will be accepted by the listed companies.
This amendment will help in curbing fraud and manipulation risk in physical transfer of securities by unscrupulous persons. Further, with shares held in demat form will improve ease, convenience and safety of transactions for investors.
All the investors who are holding shares etc. in physical form, should consider opening a demat account at the earliest and submit request for dematerialization of their shares in order to protect the liquidity of the shares. Utilise this mandate to demat them so you and your family can make use of the wealth locked in them.
The earlier deadline to convert shares in dematerialized form was with effect from December 5, 2018. Subsequently, SEBI had received representations from shareholders for extension of the date of compliance. In view of the same, the deadline was extended and the aforesaid requirement of transfer of securities only in demat form shall now come into force from April 1, 2019.
Q.1 What will happen if I don’t demat my physical shares?
Ans: In this case, you will not be able to sell or transfer your shares after April 1, 2019. You will have to wait for demat of shares before being able to sell/transfer them.
Q.2 In case of demise of shareholder holding physical securities, what could be the procedure to transfer those physical securities ((nominee registered / nominee not registered)?
Ans: Transmission and transposition of shares held in paper form will continue to be allowed. Transmission happens upon death of any or all shareholders. Transposition means change in ownership pattern; eg. From combination A & B (in this order) to B & A or from A & B & C to B & A & C. Though these will still be possible in paper form even after April 1, 2019, conversion to demat is still suggested for many other benefits it offers.
Q.3 What is to be done by the investors holding non-listed shares in physical form?
Ans: Investors may continue holding non-listed shares in physical form. They will be able to sell/transfer the shares as they wish even after April 1, 2019. However, you may suggest your non-listed company to join NSDL so that even those shares can be dematerialized, and shareholders can benefit from the same.
1. Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to Schedule 5 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 notified vide Notification No. FEMA 20(R)/2017-RB dated November 07, 2017, as amended from time to time and the relevant directions issued thereunder. A reference is also invited to AP (DIR Series) Circular No. 22 dated April 6, 2018, AP (DIR Series) Circular No.31 dated June 15, 2018, and AP (DIR Series) Circular No. 26 dated March 27, 2019 on FPI investments in debt instruments.
2. As a measure to broaden access of non–resident investors to debt instruments in India, Foreign Portfolio Investors (FPI) are now permitted to invest in municipal bonds.
3. FPI investment in municipal bonds shall be reckoned within the limits set for FPI investment in State Development Loans (SDLs).
4. All other existing conditions for investment by FPIs in the debt market remain unchanged.
5. AD Category-I banks may bring the contents of the circular to the notice of their customers/constituents concerned.
6. Necessary amendments to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 (Notification No. FEMA 20(R)/2017-RB dated November 07, 2017) have been notified by the Government on April 18, 2019 and are annexed to this circular.
7. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
SEBI notifies Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2019 which shall come into force on the date of their publication in the Official Gazette.
SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (SECOND AMENDMENT) REGULATIONS, 2019
No. SEBI/LAD-NRO/GN/2019/12. —In exercise of the powers conferred by section 11, sub-section (2) of section 1 1A and section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with section 31 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, namely,–
1. These regulations may be called the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2019.
2. They shall come into force on the date of their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, –
(1) in regulation 52, –
(i) after sub-regulation (1), following proviso shall be inserted, namely, –
“Provided that in case of entities which have listed their equity shares and debt securities, a copy of the financial results submitted to stock exchanges shall be provided to Debenture Trustees on the same day the information is submitted to stock exchanges.”
(ii) sub-regulations (5) shall be substituted with the following, namely, –
“(5) The listed entity shall, within seven working days from the date of submission of the information required under sub- regulation (4), submit to stock exchange(s), a certificate signed by debenture trustee that it has taken note of the contents.”
SEBI vide its circular SEBI/HO/MIRSD/DOS3/CIR/P/2019/68 dated 27th May, 2019, in order to secure investor’s interest and enhance transparency, has issued following guidelines for amendment to existing regulatory framework for Debenture Trustees (DT):
1. DTs shall disclose the nature of compensation arrangement with its clients on their websites
2. DTs shall display on their website the ISIN wise details of interest/ redemption due to the debenture holders within 5 working days of start of financial year
3. DTs shall also update the status of payment ISIN-wise against such issuers not later than 1 day from the due date
4. RTA / Issuers shall henceforth forward the details of debenture holders to the DT at the time of allotment and thereafter by the seventh working day of every next month
5. In privately placed issues, additional Covenants as to additional interest for delayed payment of interest/principal amount and for delayed listing of debt securities shall be included in Summary Term Sheet
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