Category: SEBI Notification & Circular

Download SEBI Circular CIR/MRD/DP/ 6/2013 For Introduction of Periodic Call Auction for Illiquid Scrips and Extension of Pre-open Session to all Scrips. Trading in illiquid scrips in the equity market shall be conducted only through periodic call auction sessions. Criteria for illiquidity – For the purpose of this circular, a scrip, whether trading in normal market or trade for trade settlement, shall be classified as illiquid on a stock exchange if all the following conditions are met. The average daily trading volume of a scrip in a quarter is less than 10000. The average daily number of trades is less than 50 in a quarter

CIRCULAR CIR/MRD/DP/ 6/2013, February 14, 2013

To All Stock Exchanges

Dear Sir/Madam,

Sub: Introduction of Periodic Call Auction for Illiquid Scrips and Extension of                                             Pre-open Session to all Scrips.

1. SEBI vide circular no CIR/MRD/DP/21/2010 dated July 15, 2010 introduced Call      Auction in Pre-open session on pilot basis at NSE and BSE for scrips forming part of       Nifty and Sensex. Vide circular CIR/MRD/DP/ 01/2012 dated January 20, 2012, the       framework of call auction was extended to IPO scrips and re-listed scrips. The issue of       extending call auction mechanism in pre-open session to all scrips was deliberated in       Secondary Market Advisory Committee (SMAC). SMAC also made recommendation on       introduction of trading through periodic call auction mechanism for illiquid scrips in the       equity market. Accordingly, it has been decided to implement following:

1.1. Introduce trading through periodic call auction for illiquid scrips in equity market

1.2. Extend the pre-open session to all other scrips in the equity market

2. Periodic Call Auction for Illiquid scrips

2.1.   Trading in illiquid scrips in the equity market shall be conducted only through            periodic call auction sessions.

2.2.   Criteria for illiquidity – For the purpose of this circular, a scrip, whether trading in normal market or trade for trade settlement, shall be classified as illiquid on a stock exchange if all the following conditions are met:

2.2.1. The average daily trading volume of a scrip in a quarter is less than 10000;

2.2.2. The average daily number of trades is less than 50 in a quarter;

2.2.3. The scrip is classified as illiquid at all exchanges where it is traded.

2.3.    Entry into periodic call auction mechanism – Stock exchanges shall identify illiquid scrips at the beginning of every quarter and move such scrips to periodic call auction mechanism.

2.4.    Exit from periodic call auction mechanism – Stock exchanges shall move scrips from periodic call auction mechanism to normal trading session if the following criteria are met:

2.4.1. The scrip has remained in periodic call auction for at least two quarters

2.4.2. It is not classified as illiquid as per para 2.2

2.5.    Notice to market – For entry and exit of scrips in the call auction mechanism, a notice of two trading days shall be given to the market.

2.6.    Number of auction sessions – Periodic call auction sessions of one hour each shall be conducted throughout the trading hours with the first session starting at 9:30am.

2.7.    Session duration – The call auction session duration shall be one hour, of which 45 minutes shall be allowed for order entry, order modification and order cancellation, 8 minutes shall be for order matching and trade confirmation and remaining 7 minutes shall be a buffer period for closing the current session and facilitating the transition to next session. The session shall close randomly during last one minute of order entry between the 44^th & 45^th minute. Such random closure shall be system driven.

2.8.    Un-matched orders- All un-matched orders remaining at the end of a call auction session shall be purged.

2.9.    Price band – A maximum price band of 20% shall be applicable on the scrips through the day. Exchanges may reduce the price bands uniformly based on surveillance related concerns.

2.10. If the Market wide Index Circuit Breaker gets triggered at any time during the            periodic call auction session, the session shall be cancelled and all orders shall be purged. The periodic call auction session shall be resumed at the  nearest half hour after the normal market resumes.

2.11. Penalty for certain trades – In the event where maximum of buy price entered  by a client (on PAN basis) is equal to or higher than the minimum sell price entered by that client and if the same results into trades, a penalty shall be  imposed on such trades. The penalty shall be calculated and charged by the exchange and collected from trading members on a daily basis. Trading members may recover such penalty from clients. The penalty so collected    shall be deposited to Investor Protection Fund. Penalty for each such instance per session will be higher of the following:

a.   0.50% of the trade value for sale and 0.50% of trade value for the buy, resulting in 1% penalty for the client on PAN basis. OR

b.   2500 /- for the buy trade and 2500 /- for the sell trade, resulting in penalty of 5000/- for the client on PAN Basis.

2.12. All other conditions for trading in periodic call auction sessions shall be as per             the circulars CIR/MRD/DP/21/2010 dated July15, 2010, CIR/MRD/DP/27/2010 dated August 27, 2010 and CIR/MRD/DP/32/2010 September 17, 2010.

3. Pre-Open Call Auction Session

3.1. In partial modification of SEBI circular no CIR/MRD/DP/21/2010 dated July 15,         2010, pre-open call auction session shall be applicable to all exchanges with active trading and for all scrips that are not classified as illiquid as per para 2.2 above.

3.2. Price bands in pre-open session shall be as applicable in the normal market.

3.3. All orders shall be checked for margin sufficiency at order level for inclusion in  pre-open session.

3.4. All other conditions for pre-open call auction session shall be as per circulars        CIR/MRD/DP/21/2010 dated July15, 2010, CIR/MRD/DP/27/2010 dated August 27, 2010 and CIR/MRD/DP/32/2010 September 17, 2010.

4. The provisions of this circular shall be effective from April 01, 2013.

Download Sebi Circular For CIR/MRD/DP/05/2013 for Liquidity Enhancement Schemes for Illiquid Securities in Equity Cash market. LES may be introduced in any of the following securities. Securities having a mean impact cost greater than or equal to 2% for an order size of Rs.1 lakh, where mean impact cost of the security on the stock exchange is calculated over the past 60 trading days and Securities introduced for trading in the “permitted to trade” category.

CIR/MRD/DP/05/2013, February 08, 2013

To All Stock Exchanges.

Dear Sir/Madam,

Sub: Liquidity Enhancement Schemes for Illiquid Securities in Equity Cash market

1. SEBI vide its circular CIR/DNPD/5/2011 dated June 02, 2011, permitted liquidity enhancement schemes (LES) in Equity Derivatives Segment and specified broad guidelines for the same.

2.    Pursuant to the introduction of LES scheme in derivatives segment to enhance liquidity in illiquid derivative products, there was demand that similar scheme may also be introduced for the Equity Cash market. It has therefore been decided to permit stock exchanges to introduce LES to enhance liquidity of illiquid securities in their Equity Cash market.

3.    LES may be introduced in any of the following securities:

(a)   Securities having a mean impact cost greater than or equal to 2% for an order size of Rs.1 lakh, where mean impact cost of the security on the stock exchange is calculated over the past 60 trading days.

(b)   Securities introduced for trading in the “permitted to trade” category.

4.    LES may be continued till such time as the security achieves mean impact cost of less than 2% for an order size of Rs.1 lakh on the stock exchange during the last 60 trading days.

5.    Discontinuation of LES for any security shall be done after advance notice of 15 days.

6.    Stock exchanges may re-introduce LES on a security if the criterion as mentioned in para 3(a) is satisfied.

7.    In case any stock exchange introduces LES on securities eligible under para 3(a) above, other stock exchanges may also introduce LES in the same securities even if those are not eligible on their stock exchange under 3(a). Such LES of other stock exchanges shall not be continued beyond the period of LES at the initiating stock exchange.

8.    The stock exchange shall ensure that the LES, including any modification therein or its discontinuation,

(a)  has the prior approval of its Board and its implementation and outcome is monitored by the Board at quarterly intervals;

(b)  prescribes and monitors the obligations of liquidity enhancers (liquidity provider, market maker, maker-taker or by whatever name called);

(c)  disburses the incentives linked to performance;

(d)  is objective, transparent, non-discretionary and non-discriminatory;

(e)  does not compromise market integrity or risk management;

(f)   complies with all the relevant laws; and

(g)  is disclosed to the market atleast 15 days in advance and its outcome (incentives granted and volume achieved – liquidity enhancer wise and security wise) is disseminated monthly within a week of the close of the month.

9.    The incentives under LES shall be transparent and measurable. These may  take either of the two forms:

(a)  Discount  in  fees,  adjustment  in  fees  in  other  segments  or  cash payment;

(b)  Shares, including options and warrants, of the stock exchange.

10. If a stock exchange chooses the form specified in Para ‘9a’ above, the incentives under all LES (both Equity Cash and Derivative Segment), during a financial year, shall not exceed 25% of the net profits or 25% of the free reserves of the Stock Exchange, whichever is higher, as per the audited financial statements of the preceding financial year. If, however, a stock exchange chooses the form specified in Para ‘9b’ above, the shares, including the shares that may accrue on exercise of warrants or options, given  as  incentives  under  all  LES (both  Equity  Cash  and  Derivative Segment), during a financial year, shall not exceed 25% of the issued and outstanding shares of the Stock Exchange as on the last day of the preceding financial year. Further, the Exchange shall ensure that it is compliant with the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 at all times.

11. From a market integrity perspective, the stock exchange shall ensure the following, in respect of LES for both Equity Cash market and Derivative Segment:

(a)   The Exchange must have systems and defined procedures in place to monitor collusion between trading members indulging in trades solely for seeking incentives and prevent payment of incentives in such cases.

Download Sebi CIRCULAR CIR/ IMD/ DF/02/2013 For time Period for initial offering and allotment of units of Mutual Fund Scheme eligible under Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS). The maximum period for which initial offering of Mutual Fund scheme eligible under RGESS shall be open for subscription, is extended from the existing stipulation of fifteen days to thirty days

CIR/ IMD/ DF/02/2013, February 06, 2013

All Mutual Funds/Asset Management Companies (AMCs)/ Trustee Companies/Boards of Trustees of Mutual Funds

Sir/ Madam,

Subject: Time Period for initial offering and allotment of units of Mutual Fund Scheme eligible under Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS)

1.  As per Regulation 34 of SEBI (Mutual Funds) Regulations, 1996, initial offering period of any Mutual Fund scheme (other than ELSS scheme) shall not be more than fifteen days. Further, as per Regulations 35 and 36 of SEBI (Mutual Funds) Regulations, 1996, the Mutual Fund / AMC shall allocate the units, pay the refundable amount, if any, to the concerned  applicants  and  also  issue  statement  of  accounts  to  the applicants  whose
applications has been accepted, within a period of five working days from the date of closure of initial subscription.

2.  With respect to Mutual Fund scheme eligible under RGESS, which is a tax-saving scheme
notified by the Government of India on November 23, 2012, it has been decided that –

a.  The maximum period for which initial offering of Mutual Fund scheme eligible under  RGESS shall be open for subscription, is extended from the existing stipulation of fifteen days to thirty days.

b.  Further, for Mutual Fund scheme eligible under RGESS, the period within which Mutual Fund/ AMC should allocate the units, refund money and issue statements of accounts, is extended from the existing requirement of five working days from the closure of the initial subscription to fifteen days from the closure of the initial subscription.

3.  This circular shall come into force with immediate effect.

Download SEBI Circular CIR/CFD/DIL/5/2013 ForScheme of Arrangement under the Companies Act, 1956 – Revised requirements for the Stock Exchanges and Listed Companies. Listed companies desirous of undertaking a Scheme of Arrangement under Chapter V of the Companies Act,1956, (Amalgamation/   Merger/ Reconstruction/ Reduction Of Capital, etc.) shall file the Draft Scheme with the stock exchanges in terms of Clause 24(f) of the Listing Agreement. Listed companies shall also submit the documents mentioned in Para 2 of Part A of Annexure I to this Circular to the stock exchanges along with the Draft Scheme. Such listed companies shall place before its Audit Committee the Valuation Report obtained from an Independent Chartered Accountant. The Audit Committee shall furnish a report recommending the Draft Scheme, taking into consideration, inter alia, the aforementioned valuation report.

CIR/CFD/DIL/5/2013                                                                          Date: February 4, 2013

To

The Stock Exchanges

Dear Sir/Madam

Sub:  Scheme of Arrangement under the Companies Act, 1956 – Revised requirements for the Stock Exchanges and Listed Companies.

1.        Vide  Circular  No.  SEBI/CFD/SCRR/01/2009/03/09,  dated  September 03,2009 (“Circular”) certain requirements were prescribed for seeking exemption under sub-rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957 (“SCRR,1957”) from strict enforcement of clause (b) to sub-rule (2) of rule 19 by listed companies.

2. The existing Clause 24(f) of the Listing Agreement mandates that a listed company shall file any scheme/petition, proposed to be filed before any Court or Tribunal under sections 391, 394 and 101 of the Companies Act, 1956, with the stock exchange, for approval, at least a month before it is presented to the Court or Tribunal.

3.In terms of the above mentioned Circular, pursuant to a scheme of reconstruction or amalgamation being sanctioned by the Hon’ble High Court under sections 391-394 or 101 of the Companies Act, 1956 (“Scheme”), the listed companies desirous of getting their equity shares listed after merger/de-merger/amalgamation etc. were required to seek an exemption from Securities and Exchange Board of India (“SEBI”) from the requirements of Rule 19(2)(b) of SCRR, 1957. In terms of Rule 19(7) of SCRR, 1957, SEBI has been granting exemption to such listed companies from time to time, on a case to case basis.

4 However, in the recent past, SEBI has received applications, seeking exemption,from certain entities containing, inter alia, (a) inadequate disclosures, (b) convoluted schemes of arrangement, (c) exaggerated valuations, etc. SEBI is of the view that granting listing permission or exemption from the requirements of Rule 19(2)(b) of SCRR, 1957 based on such applications may not be in the interest of minority shareholders. At the same time, if listing permission or such an exemption is delayed or denied, it would add to the uncertainty and would deprive shareholders of an exit opportunity.

5.        In order to avoid such situations, the existing requirements are being revised. The salient features of the revised requirements, include the following:

I.      Requirements before the Scheme is submitted for sanction by the Hon’ble High Court

A.   Obligations of Listed Companies The obligations of a listed company, inter alia, include:

5.1.   Listed companies desirous of undertaking a Scheme of Arrangement under Chapter V   of   the   Companies   Act,        1956,    (Amalgamation/   Merger/ Reconstruction/ Reduction Of Capital, etc.) shall file the Draft Scheme with the stock exchanges in terms of Clause 24(f) of the Listing Agreement. Listed companies shall also submit the documents mentioned in Para 2 of Part A of Annexure I to this Circular to the stock exchanges along with the Draft Scheme.

5.2.   Such listed companies shall place before its Audit Committee the Valuation Report obtained from an Independent Chartered Accountant. The Audit Committee shall furnish a report recommending the Draft Scheme, taking into consideration, inter alia, the aforementioned valuation report.

5.3.   Listed companies shall choose one of the stock exchanges having nation-wide trading terminals as the designated stock exchange for the purpose of coordinating with SEBI.

5.4.   Listed companies shall be required to:-(a) include the Observation Letter of the stock exchanges, referred to in Clause 5.8 below, in the notice sent to the shareholders seeking approval of the Scheme; and

(b) bring the same to the notice of the Hon’ble High Court at the time of seeking approval of the Scheme.

B.   Obligations of The Stock Exchanges

5.5.  The designated stock exchange, upon receipt of the Draft Scheme and the documents referred to in Clause 5.1 above, shall forward the same to SEBI   within 3 working days.

5.6.  The stock exchanges shall process the Draft Scheme (including seeking clarifications from company and/or Opinion from Independent Chartered Accountant.) and forward their “Objection/No-Objection” letter on the Draft Scheme to SEBI.

5.7.  The stock exchanges shall forward their “Objection/No-Objection” letter on the Draft scheme to SEBI within 30 days from the date of application or within 7 days of date of receipt of satisfactory reply on clarifications from the company and/or opinion from independent chartered accountant, if any
5.8.  The stock exchanges, upon receipt of comments from SEBI, as referred to in Clause 5.10 below, shall issue Observation Letter to the listed company after  suitably  incorporating  the  comments  received  from  SEBI.  Stock exchanges shall provide ‘Observation Letter’ to listed company within 7 days of receipt of comments from SEBI on the Draft Scheme.

C.   Processing of the Draft Scheme by SEBI

5.9.  Upon receipt of “Objection/No-Objection” letter from the stock exchanges, SEBI  shall  provide  its  comments  on  the  Draft  Scheme  to  the  stock exchanges.   While   processing   the   Draft   Scheme,   SEBI   may   seek clarifications from any person relevant in this regard including the listed company or the stock exchanges and may also seek an opinion from an Independent Chartered Accountant.

5.10. SEBI shall endeavour to provide its comments on the Draft Scheme to the stock exchanges within 30 days from the later of the following: a.  date of receipt of satisfactory reply on clarifications, if any sought from the company by SEBI; or

b.  date  of  receipt  of  opinion  from  Independent  Chartered Accountant, if sought by SEBI; or

c.  date of receipt of  “Objection/No-Objection” letter from the stock exchanges.

D.   Disclosure on the Website

5.11. Immediately upon filing of the Draft Scheme with the stock exchanges under Clause 5.1 above, the listed company shall disclose the  Draft Scheme and all the documents mentioned in Clause 5.1 above on its website.  It  shall  also  disclose  the  Observation  Letter  of  the  stock exchanges on its website within 24 hours of receiving the same.

5.12. The stock exchanges where the specified securities are listed / proposed to
be listed shall also disclose on their websites the Draft Scheme and documents listed at Clause 5.1 above immediately on receipt. It shall also disclose the Observation Letter on its website immediately upon issuance.

E.   Redressal of Complaints:

5.13. All complaints/comments received by SEBI on the Draft Scheme shall be forwarded to the designated stock exchange, for necessary action and resolution by the listed company. Listed company shall submit to stock exchanges  a ‘Complaints  Report’  which  shall  contain  the  details  of complaints/comments received by it on the Draft Scheme from various
sources (complaints/comments   written   directly   to   the   company   or forwarded to it by the stock exchanges) prior to obtaining Observation Letter from stock exchanges on Draft Scheme.

5.14. Listed companies shall also include the ‘Complaints Report’ in the notice sent to the shareholders while seeking approval of the Scheme. The ‘Complaints Report’ shall be forwarded by the stock exchanges to SEBI before SEBI communicates its comments on the Draft Scheme to the stock exchanges.

5.15. ‘Complaints Report’ as mentioned above, shall be submitted by listed companies to the stock exchanges within 7 days of expiry of 21 days from the date of filing of Draft Scheme with stock exchanges and hosting the Draft Scheme along with documents listed at Clause 5.1 above on the websites of stock exchanges and the listed company. The stock exchanges
shall thereafter submit the ‘Complaints Report’ to SEBI. Such Report shall be submitted as per the format specified at Annexure II to this Circular. F.   Approval of Shareholders to Scheme Through Postal Ballot And e- Voting:

5.16. Listed companies shall ensure that the Scheme submitted with the Hon’ble High Court for sanction, provides for obtaining shareholders’ approval through special resolution passed through postal ballot and e-voting, after disclosure of all material facts in the explanatory statement sent to the shareholders in relation to such resolution. The Scheme shall also provide that the special resolution shall be acted upon only if the votes cast by public shareholders in favor of the proposal amount to at least two times the number of votes cast by public shareholders against it.

II.      Requirements after the Scheme is Sanctioned by the Hon’ble High Court (hereinafter referred to as “Approved Scheme”)

5.17. Upon  sanction  of the  Scheme  by  the  Hon’ble  High  Court,  the  listed company shall submit the documents mentioned in Para 2 of Part B of Annexure I to this Circular, to the stock exchanges. 5.18. The designated stock exchange shall forward its recommendations to SEBI on the documents submitted by the listed company as referred to in Clause

5.17 above.

5.19. SEBI shall endeavour to offer its comments/approval, wherever applicable, to the designated stock exchange in 30 days.

6.        Validity of Observation Letter: The validity of the ‘Observation Letter’ of stock exchanges shall be six months from the date of issuance, within which the Scheme shall be submitted to the Hon’ble High Court.

7.        Applicability: The revised requirements shall be applicable to listed companies which, on the date of this Circular, have not submitted the Scheme with the Hon’ble High Court. It is clarified that the revised requirements shall also be applicable in cases wherein the companies have submitted the Draft Scheme with the stock exchanges under Clause 24(f) of Listing Agreement and such schemes have not yet been submitted with the Hon’ble High Court for approval. Therefore, the companies that have submitted the Draft Scheme with the stock exchanges and have already  received approval thereon but have not yet submitted to the Hon’ble High Court,  shall be required to resubmit the same in accordance with the requirements of this Circular.

8.For consideration of applications involving Schemes of Arrangement, Warrants along with NCDs, and Issuance of Equity shares with Differential Rights, the detailed requirements to be complied with are mentioned in Annexure I to this Circular.

9.        Repeal and Saving: Pursuant to issuance of this Circular, SEBI Circular No. SEBI/CFD/SCRR/01/2009/03/09  dated  September        03,   2009  stands  rescinded.

Notwithstanding such rescission, anything done or any action taken or pending in respect of the said Circular shall continue to be dealt under SEBI Circular No. SEBI/CFD/SCRR/01/2009/03/09 except as expressly provided under Clause 7 of
this Circular.

10.     The stock exchanges are advised to take into account the requirements of this Circular and to bring the same to the notice of the companies listed on their exchange.

11.      This Circular is issued in exercise of the powers conferred under Section 11 and Section 11A of the SEBI Act, 1992 read with Rule 19(7) of SCRR, 1957.

12.      This Circular is available on SEBI website.

Yours faithfully

Requirements  for  Listed  Companies  While  Submitting  Draft

Annexure I       Part A

Part B

Part C

Part D
Part E
Annexure II

Scheme of Arrangement

Requirements  for  Stock  Exchanges/Listed  companies  while Submitting Scheme Sanctioned by the Hon’ble High Court

Application by a Listed Issuer for Listing of Equity Shares with Differential Rights as to Dividend, Voting or Otherwise

Application by a Listed Issuer for Listing of Warrants Offered Along With Non Convertible Debentures (NCDs)

Miscellaneous

Format for Complaints Report

ANNEXURE I

PART A

Requirements for Listed Companies While Submitting Draft Scheme of Arrangement

1.         A listed issuer may submit the Draft Scheme under sub-rule (7) of rule 19 of the

Securities Contracts (Regulation) Rules, 1957, thereby seeking relaxation from the strict enforcement of clause (b) to sub-rule (2) of rule 19 thereof, for listing of its equity shares on a recognized stock exchange without making an initial public offer, if it satisfies the following conditions:

a.      The equity shares sought to be listed are proposed to be allotted by the

unlisted issuer (transferee entity) to the holders of securities of a listed entity (transferor  entity)  pursuant  to  a  scheme  of  reconstruction  or amalgamation (Scheme) sanctioned by a High Court under section 391-
394 of the Companies Act, 1956;

b.      At least twenty five per cent of the post-scheme paid up share capital of

the  transferee  entity  shall  comprise  of  shares  allotted  to  the  public shareholders in the transferor entity;

c.      The transferee entity will not issue/ reissue any shares, not covered under

the Draft Scheme;

d.      As on date of application, there are no outstanding warrants/ instruments/

agreements which give right to any person to take the equity shares in the transferee entity at any future date. If there are such instruments stipulated in the Draft Scheme, the percentage referred to in Para (b) above shall be computed after giving effect to the consequent increase of capital on account  of  compulsory  conversions  outstanding  as  well  as  on  the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised; and

e.      The shares of the transferee entity issued in lieu of the locked-in shares of

the transferor entity will be subject to lock-in for the remaining period.

2.         The listed company shall submit the following documents to the Stock Exchanges:

a.      Draft Scheme of arrangement/ amalgamation/ merger/ reconstruction/

reduction of capital, etc.;

b.      Valuation Report from Independent Chartered Accountant;

c.      Report from the Audit Committee recommending the Draft Scheme, taking

into consideration, inter alia, the Valuation Report as stated in Para (b)

above. The Valuation Report mentioned in Para (b) above is required to

be placed before the Audit Committee of the listed company;

d.      Fairness opinion by merchant banker;

e.      Pre and post amalgamation shareholding pattern of unlisted company;

f.       Audited financials of last 3 years (financials not being more than 6 months

old) of unlisted company;

g.      Compliance with Clause 49 of Listing Agreement; and

h.      Complaints Report as per Annexure II of this Circular.

3.         Draft Scheme along with various documents submitted (as stipulated in Para 2

above), shall be displayed from the date of filing of Draft Scheme with the stock exchanges on the websites of:

a.  the listed company; and

b.  the stock exchanges where the specified securities are proposed to be
listed.

PART B Requirements for Stock Exchanges/Listed companies while Submitting Scheme                                       Sanctioned by the Hon’ble High Court

1.         Stock exchanges shall ensure that , an unlisted issuer may make an application to

the Board under sub-rule (7) of rule 19 of the Securities Contracts (Regulation)

Rules,   1957,  pursuant  to  Part  A  of  this  Circular  if  it  satisfies  the  following

conditions:

a.  Observation Letter has been issued by the stock exchanges to the Draft
Scheme;

b.  The listing of the equity shares of the transferee entity is in terms of the
Scheme sanctioned by the Hon’ble High Court or its order whereby the
Scheme has been sanctioned;

c.  The equity shares sought to be listed have been allotted by the unlisted
issuer (transferee entity) to the holders of securities of a listed entity
(transferor entity); and

d.  The share certificates have been dispatched to the allottees pursuant to the
Scheme or their names have been entered as beneficial owner in the
records of the depositories.

2.         Upon sanction of the Scheme by the Hon’ble High Court, the listed company shall

submit to the stock exchanges:

a.  Copy of the High Court approved Scheme;

b.  Result of voting by shareholders for approving the Scheme;

c.  Statement explaining changes, if any, and reasons for such changes carried
out in the Approved Scheme vis-à-vis the Draft Scheme

d.  Status of compliance with the Observation Letter/s of the stock exchanges

e.  The application seeking exemption from Rule 19(2)(b) of SCRR, 1957,
wherever applicable; and

f.    Complaints Report as per Annexure II of this Circular.

3.         In case of a hiving off of a division of a listed entity (say, “entity A”) and its merger

with a newly formed or existing unlisted issuer (say, “entity B”) there will not be any

additional lock-in, if the paid-up share capital of the unlisted issuer ‘B’ is only to the

extent of requirement for incorporation purposes

4. In case of merger where the paid-up share capital of the unlisted issuer seeking

listing    (say,   “entity  B”)  is  more  than  the  requirement  for  incorporation,  the

promoters’ shares shall be locked-in to the extent twenty per cent. of the post merger paid-up capital of the unlisted issuer, for a period of three years from the date of listing of the shares of the unlisted issuer. The balance of the entire premerger capital of the unlisted issuer shall also be locked-in for a period of three years from the date of listing of the shares of the unlisted issuer.

5.         The transferee entity shall confirm that it has taken steps for listing of its equity shares, within thirty days of the receipt of the order of the Hon’ble High Court sanctioning the Scheme, simultaneously on all the stock exchanges where the equity shares of the transferor entity are/were listed.

6.         The formalities for commencing of trading shall be completed within forty five days

of the order of the Hon’ble High Court. Before commencement of trading, the transferee  entity  shall  give  an  advertisement  in  one  English  and  one  Hindi newspaper with nationwide circulation and one regional newspaper with wide circulation at the place where the registered office of the transferee entity is situated, giving following details:

a.   Name and address of its registered office;

b.   Details of change of name and/or object clause;

c.   Capital structure – pre and post scheme of amalgamation. This shall provide

details of the authorized, issued, subscribed and paid up capital (Number of

instruments, description, and aggregate nominal value);

d.   Shareholding pattern giving details of its promoter group shareholding,

group companies;

e.   Names of its ten largest shareholders – number and percentage of shares

held by each of them, their interest, if any;

f.    Details of its promoters – educational qualifications, experience, address;

g.   Business and its management;

h.   Reason for the amalgamation;

i.    Financial statements for the previous three years prior to the date of listing;

j.    Latest audited financial statements along with notes to accounts and any

audit qualifications. Change in accounting policies in the last three years

and their effect on profits and reserves (Financial statements should not be

later than six months prior to the date of listing);

k.   Details of its other group companies including their capital structure and

financial statements;

l.    Outstanding litigations and defaults of the transferee entity, promoters,

directors or any of the group companies;

m. Particulars of high, low and average prices of the shares of the listed

transferor entity during the preceding three years;

n.   Any material development after the date of the balance sheet; and

o.   Such other information as may be specified by the Board from time to time.

 

PART C Application by a Listed Issuer for Listing of Equity Shares with Differential Rights as                                                to Dividend, Voting or Otherwise

1. A listed issuer desirous of listing of its equity shares with differential rights as to dividend, voting or otherwise, without making an initial public offer of such equity shares, may make an application to the Board under sub-rule (7) of rule 19 of the SCRR seeking relaxation from strict enforcement of clause (b) to sub-rule (2) of rule 19 thereof if it satisfies the following conditions:

a.  such equity shares are issued to all the existing shareholders as on record
date by way of rights or bonus issue;

b.  the  issuer  is  in  compliance  with  the  conditions  of  minimum  public
shareholding requirement stipulated in the equity listing agreement, with
reference to the equity shares already listed and the equity shares with
differential rights proposed to be listed; and

c.  the issuer undertakes to disclose the shareholding pattern of the equity
shares  with  differential  rights  separately  in  terms  of  the  equity  listing
agreement.

PART D

Application by a Listed Issuer for Listing of Warrants Offered Along With
Non Convertible Debentures (NCDs)

1.         A listed issuer, desirous of listing of its warrants without making an initial public offer of warrants, may make an application to the Board under sub-Rule (7) of rule 19 of the SCRR seeking relaxation from strict enforcement of clause (b) to sub-rule (2) of rule 19 if it satisfies the following conditions:

a.  warrants are issued as combined offering of NCDs and warrants through qualified institutions placement under Chapter VIII of the SEBI (Issue of  Capital  and  Disclosure  Requirements)  Regulations, 2009 (hereinafter referred to as “the ICDR Regulations”);

b.  the issuer is in compliance with all the provisions of Chapter VIII of the ICDR
Regulations ; and

c.  NCDs and warrants shall be traded in the minimum trade lot of one lakh
rupees.

PART E

Miscellaneous

1.         An application to the Board under Part B, Part C or Part D shall be made through

the designated stock exchange of the listed company and the designated stock exchange shall forward the application along with its recommendations, giving reasons in writing to the Board.

2. The Board may, while granting relaxation, if any, under sub-rule (7) of rule 19 of SCRR, stipulate any other conditions as may be deemed necessary in the interest of investors and securities market, under the facts and circumstances of the specific case.

Download SEBI CIRCULAR CIR/MRD/DP/04/2013  for Comprehensive guidelines on Offer For Sale (OFS) of Shares by Promoters through the Stock Exchange Mechanism. All promoters/promoter group entities of top 100 companies by market capitalisation  in  any  of  the  last  four  completed  quarters,  market capitalisation being calculated as average market capitalisation in a quarter.

To,

The Managing Director and CEO, BSE Limited.

Dear Sir / Madam,

January 25, 2013

The Managing Director
National Stock Exchange of India Ltd.

Sub: Comprehensive guidelines on Offer For Sale (OFS) of Shares by
Promoters through the Stock Exchange Mechanism.

1.    Comprehensive guidelines on sale of shares through OFS mechanism were issued vide circular no CIR/MRD/DP/18/2012 dated July 18, 2012. Based on past experience of sale of shares through OFS, the mechanism of OFS has  been  found  to  be  useful  by  market participants  and  popular  for offloading shares of promoters in listed companies in order to achieve minimum public shareholding. With the deadline of June 2013 to achieve minimum public  shareholding  approaching,  to encourage promoters to offload their shares through OFS route and based on market feedback, it has  been  decided  to  modify  the  OFS  framework  to  make  it  more economical, efficient and transparent.

2.    The aforesaid circular is amended as under:

2.1. Para 1 (b) (ii) shall be replaced by the following:

All promoters/promoter group entities of top 100 companies by market capitalisation  in  any  of  the  last  four  completed  quarters,  market capitalisation being calculated as average market capitalisation in a quarter.

2.2. Para 2(c) shall be replaced by the following:Indicative Price is the volume weighted average price of all the valid bids.

2.3. Para 5(d) (ii) shall be replaced by the following: Orders shall be placed during trading hours.

2.4. Para 5 (d) (iii) shall be omitted.

2.5.   Para 5(e) (i) shall be replaced by the following: A separate window for the purpose of sale of shares through OFS shall be created. The following orders shall be valid in the OFS window:

A.   Orders with 100% of margin paid upfront by institutional investors and non-institutional investors. Such orders can be modified or canceled at any time during the trading hours.

B.   Orders without paying upfront margin by institutional investors only.  Such  orders  cannot  be  modified  or  cancelled  by  the investors or stock brokers, except for making upward revision in the price or quantity.

2.6.   Para 5 (e) (ii) shall be replaced by  the following: Cumulative bid quantity shall be made available online to the market throughout the trading session at specific intervals in respect of orders with 100% upfront margin and separately in respect of orders placed without any upfront margin. Indicative price shall be disclosed to market throughout the trading session. The indicative price shall be calculated based on all valid bids/orders.

2.7.   Para 6 (a) shall be replaced by the following: Clearing Corporation shall collect 100% margin in cash from non-institutional investors. In case of institutional investors who place orders/bids with 100% of margin upfront, custodian confirmation shall be within trading hours.  In case of institutional investors who place orders without upfront margin, custodian confirmation shall be as per the  existing  rules  for secondary  market  transactions.  The  funds collected shall neither be utilized against any other obligation of the trading member nor co-mingled with other segments.

2.8.   Para 6 (b) shall be replaced by the following: In case of order/bid modification or cancellation, such funds shall be released/ collected on a real time basis by clearing corporation.

2.9.   Para 8 (i) (b) shall be replaced by the following:Settlement  shall  take  place  on  trade  for  trade  basis.  For  non-institutional orders/bids and for institutional orders with 100% margin, settlement shall take place on T+1 day. In case of orders/bids of institutional investors with no margin, settlement shall be as per the existing rules for secondary market.

Download SEBi Circular CIR/MRD/DP/03/2013 for Guidelines for providing dedicated Debt Segment on Stock Exchanges. The debt segment shall offer electronic, screen based trading providing for order matching, request for quote, negotiated trades etc. The trading facility may be provided using exchange network including using access methods such as internet trading, mobile trading or any other methods specified by SEBI.

CIR/MRD/DP/03/2013

January 24, 2013

To

All Stock Exchanges and Clearing Corporations Dear Sir / Madam,

Sub: Guidelines for providing dedicated Debt Segment on Stock Exchanges.

1.   The market for debt securities differs from equity markets in several ways such as risk, returns, liquidity, type of participants and method of trading. While publicly issued debt securities are listed, traded and settled in  a manner similar to equity, privately placed debt is usually traded between institutional investors on ‘Over the Counter’ (OTC) basis. Such OTC transactions are mandatorily reported on reporting  platforms  at  FIMMDA,  BSE  and  NSE.  The  settlement  for  such transactions is different from that in equity markets or publicly issued debt securities.

2.   Whereas the equity markets in India offer trading infrastructure comparable to the best available globally, the debt markets lack such infrastructure. In order to cater to the unique characteristics of debt markets, it has been decided to provide dedicated a debt segment on the stock exchanges.

3.   The debt segment shall offer separate trading, clearing, settlement, reporting facilities and membership to deal in :

(i)  “debt securities” as defined in Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

(ii) Government Securities, Treasury Bills, State Government loans, SLR and Non-SLR Bonds issued by Financial Institutions, municipal bonds, single bond repos, basket repos and CBLO kind of products subject to RBI approval, where required;

(iii) Securitized debt instruments as defined in SEBI (Public Offer and Listing of Securitised Debt Instruments)Regulations, 2008;

(iv)  any other debt instruments as may be specified from time to time by the competent authority.

4.   An existing stock exchange or new stock exchange desirous of setting up debt segment may make an application to SEBI, providing operational, regulatory and any other necessary details.

5.  The broad framework /features for debt segment shall be as under-

(A)    Listing:  This  segment  shall  list  all  the  securities  and  debt  instruments mentioned at para 3 above.

(B)    Trading :

(i)  The debt segment shall offer electronic, screen based trading providing for order matching, request for quote, negotiated trades etc.

(ii) The trading facility may be provided using exchange network including using access methods such as internet trading, mobile trading or any other methods specified by SEBI.

(iii) The debt segment shall provide separate platforms for the markets described below –

a.  Retail market – which shall be a market for listing of and trading in publicly-issued debt instruments and where participation by registered trading members can be on their own account or for execution of orders placed their clients.

b.  Institutional market – which shall be a market for non-publicly-issued debt instruments with a market lot size of minimum Rs 1 crore.

(iv) In addition to institutional investors, Direct Market Access (DMA) facility shall be extended to other investors to participate in Institutional market of debt segment. In this regard, the provisions as stipulated in SEBI circular MRD/ DoP/SE/Cir- 7 /2008 dated April 03, 2008, MRD/DoP/SE/Cir- 03 /2009 dated February   20,   2009  and  CIR/MRD/DP/  20      /2012  August     02,   2012  and modifications thereto shall be applicable.

(C)    Trading  Rules:

(i)  The trading hours shall be from 9:00 hours to 17:00 hours to be in alignment with trading hours of government securities as issued by RBI.

(ii) The day count convention of Actual/Actual shall be followed for calculating interest rates.

(iii) The stock exchange shall facilitate availability of price quotes on clean price, dirty price and yield.

(iv) There shall be no shut period during which trades/ transfers are restricted for payment of interest or part redemptions. For other corporate actions such as redemptions/ put-call options, issuers may choose to specify a shut period.

(v) The record date shall be fixed not more than 15 days prior to date of Corporate  action  which  shall  be  displayed  on  trading  terminal  by  stock exchanges.

(vi)       In case of negotiated trades by members of the debt segment, the trades shall be reported to stock exchange within 30 minutes of the trade.

(D)    Clearing and Settlement:

(i)  All trades shall be cleared and settled through a clearing corporation. For this purpose, all trading members shall be self clearing members or may clear through a clearing member.

(ii)  The settlement shall depend on the market type, as given below:

a)  For  institutional  market:  All  trades  shall  be  settled  on  T+1  rolling settlement   on   DVP-I   basis   using   RBI   RTGS   account.   Stock exchanges/clearing   corporation   may   opt   to   provide   clearing   and settlement on DVP-II or DVP-III basis for this market in future and shall put in place appropriate risk management framework for the same.

b)  For retail market: The trades shall be settled on T+2 rolling settlement on DVP-III basis with settlement guarantee.

(E)      Risk management framework:

(i)  For retail market, a uniform margin rate of 10% shall be applicable on debt instruments with rating of AA or above (or with similar rating nomenclature) by recognised credit rating agencies and 25% for all other debt instruments. Further, in case of shortages, there shall be compulsory close-out with a mark up of 5% in case of debt instruments which are assigned a credit rating of AA and above and 10% in case of other debt instruments.

(ii) For institutional market, as and when settlement is done on DVP-II or DVP-III basis, appropriate margins may be prescribed after approval by SEBI.

(iii) The   clearing   corporation   shall   specify   appropriate   risk   management framework for each market, wherein it shall, inter-alia, provide for computation and collection of margins, capital adequacy norms and collateral requirements for the clearing members, settlement guarantee fund as applicable. This shall be approved by SEBI.

(F)      Trade repository: With an objective to have centralised repository for trades in  debt  instruments,  the  stock  exchanges  shall  report  trade  information  to  a common trade repository as may be specified by SEBI.

3(G)    Membership:

(i)  Any entity desirous of becoming trading member, self clearing member and/or clearing member of debt segment shall seek registration under SEBI (Stock Broker and Sub-Broker) Regulations, 1992.

(ii) Institutions  such  as  scheduled  commercial banks,  primary  dealers,  pension funds,  provident  funds,  insurance  companies,  mutual  funds  and  any  other investors as may be specified by sectoral regulators from time to time, can  trade on the debt segment either as clients of registered trading members or directly as trading member on  proprietary basis only (i.e  own-account trades only). Such institutions desirous of trading on own account only shall be given trading membership under SEBI (Stock Broker and Sub-Broker) Regulations, 1992 as proprietary trading member.

(iii) For an interim period of six months from the date of this circular or till the application for registration as per amended SEBI (Stock Broker and Sub-Broker) Regulations,1992  is refused by the Board or till cessation of membership, whichever is earlier, the transitional provisions shall be –

a.  Institutional  market  of  debt  segment:  Any  existing  registered  trading member and/or clearing member/self clearing member in derivative segment or currency derivatives segment desirous of trading or clearing trades in debt segment shall be permitted to trade or clear trades.

b.  Retail market of debt segment: Any existing registered stock broker/trading member and /or clearing member/self clearing desirous of trading or clearing trades in debt segment shall be permitted to trade or clear trades.

(iv) The trading member, proprietary trading member, clearing member and self clearing member of debt segment shall have net worth and deposit as prescribed in SEBI (Stock Broker and Sub-broker) Regulations, 1992.

(v) The Base Minimum Capital for stock broker/trading member shall be in line with SEBI circular dated December 19, 2012.

(vi)  The   stock   exchanges   and   clearing   corporation   may   specify   additional membership criteria for trading member/proprietary trading member and clearing
member/self clearing member respectively.

(H)    Market Making: With the view to infuse liquidity in the market, market makers shall be permitted in the debt segment. Market making may be provided by merchant bankers, issuers through brokers or any other entity as may be specified.  The  rules  for  market  making  shall  be  specified  by  the  stock exchanges with approval of SEBI.

6.  The stock exchanges and clearing corporations desirous of introducing debt segment     are advised to – (i)  Incorporate /frame separate Bye Laws, Rules and Regulations on debt segment in consonance with aforesaid guidelines

Download SEBI article CIR/MIRSD/2/2013: Guidelines on Identification of Beneficial Ownership. SEBI has mandated all registered intermediaries to obtain, as part of their Client Due Diligence policy, sufficient information from their clients in order to identify and verify the identity of persons who beneficially own or control the securities account. The beneficial owner has been defined in the circular as the natural person or persons who ultimately own, control or influence a client and/or persons on whose behalf a transaction is being conducted, and includes a person who exercises ultimate effective control over a legal person or arrangement. SEBI has also prescribed uniform Know Your Client (KYC) requirements for the securities markets vide circular nos. CIR/MIRSD/16/2011 dated August 22, 2011 and MIRSD/SE/Cir-21/2011 dated October 5, 2011

CIR/MIRSD/2/2013 , January 24, 2013

SEBI Registered Intermediaries:

1.  Stock Brokers through Recognized Stock Exchanges

2.  Depository Participants (DPs) through Depositories

3.  Mutual Funds (MFs)

4.  Association of Mutual Funds in India (AMFI)

5.  Portfolio Managers (PMs)

6.  KYC Registration Agencies (KRAs)

7.  Alternate Investment Funds (AIFs)

8.  Collective Investment Schemes (CIS)

9.  Investment Advisers (IAs)

 Dear Sirs,

 Sub: Guidelines on Identification of Beneficial Ownership

 1.  SEBI Master Circular No. CIR/ISD/AML/3/2010 dated December 31, 2010       has mandated all registered intermediaries to obtain, as part of their Client Due Diligence policy, sufficient information from their clients in order to identify and verify the identity of persons who beneficially own or control the securities account. The beneficial owner has been defined in the circular as the natural person or persons who ultimately own, control or influence a client and/or persons on whose behalf a transaction is being conducted, and includes a person who exercises ultimate effective control over a legal person or arrangement.

2.  SEBI has also prescribed uniform Know Your Client (KYC) requirements for the securities markets vide circular nos. CIR/MIRSD/16/2011 dated August 22, 2011 and MIRSD/SE/Cir-21/2011 dated October 5, 2011. The SEBI KYC Registration Agency (KRA) Regulations, 2011 have been notified and guidelines have been issued under these regulations from time to time.

3.  Further, the Prevention of Money Laundering Rules, 2005 also require that every banking company, financial institution and intermediary, as the case may be, shall identify the beneficial owner and take all reasonable steps to verify  his  identity.  The  Government  of  India  in  consultation  with  the regulators has now specified a uniform approach to be followed towards determination of beneficial ownership. Accordingly, the intermediaries shall comply with the following guidelines.

A. For clients other than individuals or trusts:

4.   Where the client is a person other than an individual or trust, viz., company, partnership   or   unincorporated   association/body   of   individuals,   the intermediary shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the following information:

a.  The identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has a controlling ownership interest. Explanation:   Controlling   ownership   interest   means   ownership of/entitlement to:

i.     more than 25% of shares or capital or profits of the juridical person, where the juridical person is a company;

ii.     more than 15% of the capital or profits of the juridical person, where the juridical person is a partnership; or

iii.     more than 15% of the property or capital or profits of the juridical person,   where   the   juridical   person   is   an   unincorporated association or body of individuals.

b.  In cases where there exists doubt under clause 4 (a) above as to whether  the  person  with  the  controlling  ownership  interest  is  the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person exercising control
over the juridical person through other means. Explanation: Control through other means can be exercised through voting rights, agreement, arrangements or in any other manner.

c.  Where no natural person is identified under clauses 4 (a) or 4 (b) above, the identity of the relevant natural person who holds the position of senior managing official.

B. For client which is a trust:

5.  Where the client is a trust, the intermediary shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the identity of the settler of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.

Download SEBI CIR/CFD/DIL/4/2013: Application Supported by Blocked Amount (ASBA) facility. All the SCSBs having a branch in the location of broker centers of stock exchanges, notified in terms of clause 6 of Circular dated October 4, 2012,  are required to name at least one branch before March 1, 2013, where syndicate / sub-syndicate members/ non-syndicate members can submit the ASBA forms.

CIR/CFD/DIL/ 4  /2013, January 23,2013

To All Stock Exchanges, To All Registered Merchant Bankers

To All Registered Registrars to an Issue To All Registered Bankers to an Issue To All Registered Stock Brokers

Sub.: Application Supported by Blocked Amount (ASBA) facility

1.  SEBI, vide Circular No. CIR/CFD/DIL/8/2010 dated October 12, 2010, enabled the syndicate / sub-syndicate members to procure ASBA forms (hereinafter referred as “Syndicate ASBA”) from the investors, upload the relevant details in the bidding platform and forward the forms to the Self Certified Syndicate Banks (SCSBs) for signature verification, blocking of funds, etc., and thereafter, for forwarding the forms to the registrar to the issue.

2.  Pursuant to the above, SEBI, vide Circular No. CIR/CFD/DIL/1/2011 dated April 29, 2011, enabled the ASBA facility through syndicate / sub syndicate members from 12 bidding centers and advised all the SCSBs which are providing ASBA facility in any of these 12 centers, to name atleast one branch where syndicate / sub-syndicate members can submit the ASBA forms.

 3.  Further, SEBI, vide Circular No. CIR/CFD/14/2012 dated October  04, 2012introduced an additional mechanism for investors to submit application forms in public issues using the stock broker (“broker”) network of Stock Exchanges, who may not be syndicate members in an issue. The said Circular envisages enabling the facility to submit the application forms in more than 1000 locations which are part of the nationwide broker network of the Stock Exchanges, by March 1, 2013.

4.  In partial modification of the Circular No. CIR/CFD/DIL/1/2011 dated April 29, 2011 and in order to facilitate syndicate / sub-syndicate members/ non-syndicate members to accept ASBA forms from investors in the locations :

1 a.  All the SCSBs having a branch in the location of broker centers of stock exchanges, notified in terms of clause 6 of Circular dated October 4, 2012,  are required to name at least one branch before March 1, 2013, where syndicate / sub-syndicate members/ non-syndicate members can submit the ASBA forms.

SEBI CIRCULAR FOR Establishment of Connectivity with both depositories NSDL and CDSL -Companies eligible for shifting from Trade for Trade Settlement (TFTS)  to Normal Rolling Settlement

SEBI has issued the Circular for :   Establishment of Connectivity with both depositories NSDL and CDSL -Companies eligible for shifting from Trade for Trade Settlement (TFTS) to Normal Rolling Settlement on January 21, 2013 It is observed from the information provided by the depositories that the companies listed in Annexure ‘A’ have established connectivity with both the depositories.

Download SEBI CIRCULAR CIR/MRD/DP/ 01 /2013

CIR/MRD/DP/ 01 /2013                                                                      January 21, 2013

To,

All Stock Exchanges
Dear Sir / Madam,

Sub:   Establishment of Connectivity with both depositories NSDL and CDSL – Companies eligible for shifting from Trade for Trade Settlement (TFTS) to Normal Rolling Settlement

1.      It is observed from the information provided by the depositories that the companies listed in Annexure ‘A’ have established connectivity with both the depositories.

2.      The stock exchanges may consider shifting the trading in these securities to normal Rolling Settlement subject to the following:

a)         At least 50% of other than promoter holdings as per clause 35 of Listing Agreement are in dematerialized mode before shifting the trading in the securities of the company from TFTS to normal Rolling Settlement. For this purpose, the listed companies shall obtain a certificate from its Registrar and Transfer Agent (RTA) and submit the same to the stock exchange/s. However, if an issuer-company does not have a separate RTA, it may obtain a certificate in this regard from a practicing company Secretary/Chartered Accountant and submit the same to the stock exchange/s.

 b)         There are no other grounds/reasons for continuation of the trading in TFTS.

3.      The Stock Exchanges are advised to report to SEBI, the action taken in this regard in the Monthly/Quarterly Development Report.

Yours faithfully,

Maninder Cheema

Deputy General Manager

SEBI CIRCULAR FOR AMENDMENTS TO SEBI (EMPLOYEE STOCK OPTION SCHEME AND EMPLOYEE STOCK PURCHASE SCHEME) GUIDELINES, 1999 AND EQUITY LISTING AGREEMENT.

SEBI has issued the Circular for Amendments to SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and Equity Listing Agreement. On January 17, 2013. SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (“SEBI (ESOS & ESPS) Guidelines”) were issued to enable listed entities to reward their employees through stock option schemes and stock purchase schemes and to ensure that such schemes introduced by the companies are within the regulated framework.

Download SEBI CIRCULAR CIR/CFD/DIL/3/2013

 CIR/CFD/DIL/3/2013, January 17, 2013

To All Stock Exchanges, All Registered Merchant Bankers, Dear Sir/Madam,

Sub: Amendments to SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and Equity Listing Agreement.

1.   SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (“SEBI (ESOS & ESPS) Guidelines”) were issued to enable listed entities to reward their employees through stock option schemes and stock purchase schemes and to ensure that such schemes introduced by the companies are within the regulated framework.

2.   It has come to the notice of SEBI that some listed entities have been framing their own employees benefit schemes wherein Trusts have been set up to deal in their own securities in the secondary market, which was not envisaged within the purview of SEBI (ESOS and ESPS) Guidelines 1999.

3.   It is apprehended that some entities may frame such schemes with the purpose of dealing in its own securities with the object of inflating, depressing, maintaining or causing fluctuation in the price of the securities by engaging in fraudulent and unfair trade practices. Such dealing in the company’s shares by the Trusts may also raise regulatory concerns regarding compliance with SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 2003 and SEBI (Prohibition of Insider Trading) Regulations, 1992.

 4.   In order to address the concerns over acquisition of shares by employee welfare Trusts from the secondary market, it has been decided to prohibit the listed entities from framing any employee benefit schemes involving acquisition of own securities from the secondary market.

 5.   In order to implement the above decision, certain listing conditions are hereby specified by way of inserting Clause 35C in the Equity Listing Agreement as given in Annexure I.

6.   In respect of those companies, which have already framed and implemented before the date of this circular any employee benefit schemes involving dealing in the securities of the company, which are not in accordance with SEBI (ESOS and ESPS) Guidelines, it has been decided that:-

 (i) such companies will be required to inform the details of their schemes to the Stock Exchanges within 30 days from date of this circular, in the format provided in Annexure II to this circular and to disseminate the said information on their website.

(ii) such companies shall align any existing employee benefit schemes with SEBI (ESOS and ESPS) Guidelines on or before June 30, 2013.

7.  In view of the above, it has also been decided to amend the SEBI (ESOS and ESPS) Guidelines 1999 as provided in Annexure III. The amendments made vide this
circular shall come into force with immediate effect.

 8.  All stock exchanges are advised to ensure compliance with this circular, and carry out the necessary amendments in their Listing Agreement accordingly.

9.  This circular is being issued in exercise of the powers under Section 11 read with Section 11A of the Securities and Exchange Board of India Act, 1992.

 10. This circular is available on SEBI website at www.sebi.gov.in under the categories

   “Legal Framework” and “Issues and Listing”.

Yours faithfully,

General Manager

Enclosures:

Annexure-I: Amendments to Listing Agreement

Annexure -II: Format for reporting the details of the employee benefit schemes by listed companies

Annexure -III: Amendments to SEBI (ESOS and ESPS) Guidelines 1999.

Annexure -I

Amendments to Equity Listing Agreement

1. After Clause 35B, a new clause 35C shall be inserted to read as under: “35C. (i) The issuer agrees that all the employee benefit schemes involving the securities of the company shall be in compliance with SEBI (Employee Stock Option Schemes and Employee Stock Purchase Schemes) Guidelines, 1999 and any other guidelines, regulations etc. framed by SEBI in this regard.

(ii) The issuer further agrees that all the employee benefit schemes already framed and implemented by the company involving dealing in the securities of the company, before the insertion of this clause shall be aligned with and made to conform to SEBI (Employee Stock Option Schemes and Employee Stock Purchase Schemes) Guidelines, 1999 by June 30, 2013.”

2.  In  Clause   35B  of  the  Listing  Agreement,  all  references  to  “Companies (Passing of the Resolution by Postal Ballot) Rules 2001” shall be replaced with “Companies (Passing of the Resolution by Postal Ballot) Rules 2011”.

Annexure -II

Format for furnishing the details of employee benefit schemes involving dealings in secondary market, not covered under SEBI (ESOS and ESPS) Guidelines 1999

1. Name of the Issuer:

2. Name of the Scheme:

3. Date of implementation:

4. Mode of Implementation (Trust/Direct):

5. Brief particulars about the Scheme (modus operandi):

Details of Trust, Trustees, and their relationship with Promoters or Directors of the company

6. Whether promoters/persons belonging to the promoter group/directors, are
also beneficiaries in the scheme. If so, the details thereof and their entitlements:

7. No. of shares held by Trust/any other agency managing the scheme as on the date of the circular

8. How the Trust/agency is proposing to deal with the existing holding (whether to be transferred to the employees, or to be sold in the market for transferring the benefits to the employees, if so, details regarding proposed date of such transfer or sale shall be given) Such date shall not be later than June 30, 2013 :

9. Details of persons who are entitled to shares or benefits accruing out of the shares, which form part of more than 1 percent of the paid up share capital, as on the date of the circular in the following format:

Name of Whether  falling No. of %of such No. of shares the under entitled entitlement transferred/ alloted employee Promoter/promoter shares over the to them/benefits group/directors  paid-up of which is share capital  passed  on to them out of (3)

(1)                        (2)                           (3)                      (4)                           (5)

10. Details of secondary market purchases/sales by the company/Trust/ any

other agency managing the scheme if any, since April 01, 2012 in the following
format:

Sl         Date/time                 Type                  of    No. of Securities    Price   at   which

Transaction                                              Purchased/sold

(Purchase/Sale)