31 march 2008
PROPOSED POLICY FOR IMPROVEMENT IN SALES PRACTICE BY THE
MEMBERS OF THE STOCK EXCHANGES
Introduction
SEBI has received suggestions for further improvement in sales practices
followed by the trading members of the Stock Exchanges. It is observed that the
code of conduct mentioned in the SEBI (Stock-brokers and Sub-brokers)
Regulations, 1992 as well as the bye laws/circulars/rules/regulations of the
exchanges lay down guidelines in respect of sales practices.
The matter was discussed with the Stock exchanges. It is felt that there is a need
to enhance the regulatory framework and also to create a sense of awareness
among investors in this regard. Accordingly, based on the suggestions received
from exchanges, it is proposed that brokers adopt the guidelines prescribed
below:
1. Strengthening KYC Norms
a) The Exposure/Turnover limit given by the trading members should be
commensurate with the financial details of the clients reported in the
KYC. The said limit to be specified in the KYC and strictly adhered to
or the details in KYC to be suitably modified.
b) Only person with financial standing at least comparable to that of the
client he is introducing should be accepted as introducer. The
documents such as PAN Card, Income Tax Return / Proof of residence
etc to be maintained alongwith the KYC of the client to whom he is
introducing.
2. Work history & background of the Trading Member
a) Trading Members may be required to inform the clients (upfront at the
time of entering into Member-Client agreement) about work history &
background of their firm.
b) Actions against the trading member for non-compliance/breach of
regulatory requirements, investor grievances & arbitration cases filed,
pending etc. may be disclosed.
3. Sales practices
a) Trading members owe their clients a duty to provide suitable
investment advice in the best interest of the clients. The basis of sales
efforts should reasonably represent fair treatment for the persons
towards whom the sales efforts are directed.
b) While recommending purchase or sale of any security / derivatives
contract to a client, trading member shall have reasonable grounds for
believing that the recommendation is suitable for such client on the
basis of the facts disclosed by such client as to his / her financial
position, other security holdings, past investment experience & pattern
and investment needs.
c) Prior to the execution of transactions on behalf of a non-institutional
client, trading member shall make reasonable efforts to obtain the
following information regarding the client
• Financial status
• Investment objectives
• Past investment experience & pattern
• Risk appetite of the client.
• Such other information considered to be reasonable by the
trading member
d) Trading members shall not recommend to any client any transactions
unless they have reasonable grounds for believing that the entire
recommended transaction is not unsuitable for the client, based on the
information provided by the client and after reasonable enquiry by the
trading member.
e) Trading members shall ensure that the client is adequately informed of
the nature and the implication of the recommended transactions and
the facts or circumstances which the client needs to know in order to
make informed purchase or sale decision.
f) Trading members shall also assure themselves that the client
understands the risks involved in such orders and has sufficient
networth to be able to assume the risks and bear the potential losses if
such orders result in trades.
g) Trading members shall not recommend to their clients securities or
derivative contracts on such securities in a concentrated manner,
which represents a subjective or arbitrary supply of information.
h) Trading members shall also ensure timely execution of such
transactions of their clients so as to ensure best available price for the
client.
4. Excessive trading activity
a) Trading members shall not encourage or induce excessive trading or
speculative activity in a client’s account which is not in accordance with
the objectives, risk appetite and financial situation of the client
involved.
5. Fair dealing with customers with regard to derivative products or new
financial products
a) Trading members shall ensure fair dealing with customers when
making recommendations or accepting orders for derivatives contracts
and new financial products.
b) As new products are introduced from time to time, it is imperative that
trading members make every effort to familiarize themselves with each customer’s financial situation, trading experience, and ability to meet
the risks involved with such products and to make every effort to make
customers aware of the pertinent information regarding such products.
c) The clients may be required to have certain minimum amount of networth
(e.g.5 lacs) for trading in Derivative Segment. A net-worth
certificate from a practicing Chartered Accountant or acknowledgement
for I.T. return filed should be accepted in this regard.
d) While registering any client for Derivative Segment, apart from signing
a Risk Disclosure Document, the trading member also should ensure
that adequate training vis-à-vis risk associated (including margin
requirement) with Derivative Segment is imparted to the clients.
6. Conflicts of interest
a) Trading members must maintain Chinese wall among its various
activities such as proprietary trading, investment banking, research etc.
b) No trading member may directly or indirectly offer favorable research
or a specific price target to a company as consideration or inducement
for the receipt of business or compensation.
c) Trading members shall ensure that no research analyst may purchase
or sell any security issued by a company that the research analyst
follows or derivative of such security, for a period beginning 30
calendar days before and five calendar days after the publication of a
research report concerning the company.
d) Trading member shall ensure that no research analyst may purchase
or sell any security or derivative of such security in a manner
inconsistent with the research analyst’s recommendation as reflected
in the most recent research report published by the member.
e) A member must disclose in research reports and a research analyst of
the trading member must disclose in public appearances:
(a) if the research analyst or a member of the research analyst’s
household has a financial interest in the securities of the subject
company, and the nature of the financial interest (including,
without limitation, whether it consists of any option, right,
warrant, future, long or short position)
(b) any other actual, material conflict of interest of the trading
member or research analyst of which the trading member knows
or has reason to know at the time of publication of the research
report.
7. Record Keeping
a) Trading members shall establish and maintain procedures to ensure
that sufficient information is recorded and retained about their business and clients for enabling themselves to justify the risk profiling of their
clients and the suitability of any advice given.
8. General obligations
a) Fictitious accounts: Trading members shall not allow establishment of
fictitious accounts in order to execute transactions which otherwise
would be prohibited or to disguise such transactions.
b) Unauthorized transactions: Trading members shall not cause to
execute transactions which are not explicitly authorized by the client
concerned.
c) Misuse of customers’ funds or securities: Trading members shall not
use clients’ funds and / or securities otherwise than as prescribed in
the rules, bye-laws, regulations and circulars issued there under.
d) Front running: Trading members shall not execute transactions for own
account in securities ahead of making recommendations to their clients
in such securities. Trading members shall also have adequate systems
in place to maintain the confidentiality of the information about their
dealing by their clients.
e) Trading members or their representatives shall not indulge in any
fraudulent activities, such as forgery, non-disclosure or misstatement
of material facts, manipulations and various deceptions. Making,
directly or indirectly, any false or misleading advertisement or any
untrue statement of a material fact, constitutes a fraudulent, deceptive
or manipulative act on the part of trading members.
Comments/suggestions are invited on the above proposals.
Comments/suggestions may be sent to the address mentioned below to Mr.
Susanta Kumar Das, Assistant General Manager, Integrated Surveillance
Department, SEBI before April 15, 2008.
Integrated Surveillance Department
SEBI Bhavan, 6th Floor, A-Wing
Plot No.: C4-A, “G” Block
Bandra Kurla complex
Mumbai-400 051
Comments/suggestions may also be emailed to susantad@sebi.gov.in or to
sunilk@sebi.gov.in before April 15, 2008.
http://www.sebi.gov.in/commreport/sales.pdf
Wednesday, April 2, 2008
Saturday, March 29, 2008
Concept PR - “Agency of the Year” award
Hyderabad, Andhra Pradesh, IND, 2008-03-28 (IndiaPRwire.com)
India’s largest independent Public Relations consultancy Concept PR has bagged the prestigious “Agency of the Year” award at the Public Relations Council of India’s (PRCI) National Awards for achievers.
The PRCI citation said: “Public Relations Council of India is pleased to confer upon Concept PR – India Pvt Ltd, Mumbai, as PR Agency Of the year 2007 for outstanding contribution in the field of Corporate Services and Public Relations.”
Karnataka Governor Mr. Rameshwar Thakur and State Lokayukta Justice N Santosh Hegde presented the award to Concept PR Director Ashish Jalan and President B N Kumar at a glittering function hosted by PRCI at Hotel Grand Ashok, Bangalore, last evening.
PRCI Chairman Emeritus and Chief Mentor Mr M B Jayaram said in his communiqué to Concept PR: “We are extremely happy to inform you that our jury has chosen your Agency from among the several received, to be honoured this year. Among the various professional and fellowship building activities, our National Awards for Achievers is the biggest event where PRCI recognizes the contribution made by people in different walks of life, especially for the PR fraternity. Some of them are Communication, Innovation, Media, Cinema, PR, Advertising, Rural leadership, Corporate leadership and Social leadership.”
- End -
About Public Relations Council of India (PRCI)
PRCI has emerged as the foremost platform for PR professionals for global exchange of ideas in corporate communication, image management, advertising and PR.
About Concept PR
Concept PR, part of India’s largest independent communication company Concept Communication, has catapulted itself into prominence by rapidly spreading its canvass. What began as a financial PR company in the year 2000, it now offers a wide gamut of Communications expertise – from Brand Building Communication, to Image Engineering Strategies, Investor Relations, Communication in Crisis, Event and Roadshow Management, apart from innovative media relations that meet the communication goals.
With over 150 professionals across 12 offices pan-India, Concept PR is in a formidable position with its network that covers B and C class cities and towns as well, and across all language media.
India’s largest independent Public Relations consultancy Concept PR has bagged the prestigious “Agency of the Year” award at the Public Relations Council of India’s (PRCI) National Awards for achievers.
The PRCI citation said: “Public Relations Council of India is pleased to confer upon Concept PR – India Pvt Ltd, Mumbai, as PR Agency Of the year 2007 for outstanding contribution in the field of Corporate Services and Public Relations.”
Karnataka Governor Mr. Rameshwar Thakur and State Lokayukta Justice N Santosh Hegde presented the award to Concept PR Director Ashish Jalan and President B N Kumar at a glittering function hosted by PRCI at Hotel Grand Ashok, Bangalore, last evening.
PRCI Chairman Emeritus and Chief Mentor Mr M B Jayaram said in his communiqué to Concept PR: “We are extremely happy to inform you that our jury has chosen your Agency from among the several received, to be honoured this year. Among the various professional and fellowship building activities, our National Awards for Achievers is the biggest event where PRCI recognizes the contribution made by people in different walks of life, especially for the PR fraternity. Some of them are Communication, Innovation, Media, Cinema, PR, Advertising, Rural leadership, Corporate leadership and Social leadership.”
- End -
About Public Relations Council of India (PRCI)
PRCI has emerged as the foremost platform for PR professionals for global exchange of ideas in corporate communication, image management, advertising and PR.
About Concept PR
Concept PR, part of India’s largest independent communication company Concept Communication, has catapulted itself into prominence by rapidly spreading its canvass. What began as a financial PR company in the year 2000, it now offers a wide gamut of Communications expertise – from Brand Building Communication, to Image Engineering Strategies, Investor Relations, Communication in Crisis, Event and Roadshow Management, apart from innovative media relations that meet the communication goals.
With over 150 professionals across 12 offices pan-India, Concept PR is in a formidable position with its network that covers B and C class cities and towns as well, and across all language media.
Saturday, March 22, 2008
SEBI DIP Guidelines 2000 updated upto 17-03-08
SEBI DIP Guidelines 2000 updated upto 17-03-08
is available on SEBI site
is available on SEBI site
NO load on units allotted on Reinvestment of Dividend
INVESTMENT MANAGEMENT DEPARTMENT
SEBI/IMD/CIR No. 14/120784/08
March 18, 2008
Sub: Load on Bonus Units and units allotted on Reinvestment of Dividend
1. The practice of charging load on bonus units issued to unit holders by mutual
funds was taken up with AMFI. Based on the recommendations of AMFI
Working Group on Standardization of Key Operational Areas, it was decided
that AMCs shall not charge entry as well as exit load on Bonus units and of
units allotted on reinvestment of Dividend.
2. While necessary advice in this regard is already being given to Mutual Funds
at the time of filing of draft offer documents, AMCs are hereby advised to
make necessary disclosures in this regard in the draft offer documents filed
with SEBI.
3. The provisions of this circular shall also be applicable to redemption by
existing unit holders with effect from April 1, 2008. Necessary addendum may
be issued by the AMCs in this regard.
4. This circular is issued in exercise of powers conferred under Section 11 (1) of
the Securities and Exchange Board of India Act, 1992, read with the
provisions of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996, to
protect the interests of investors in securities and to promote the development
of, and to regulate the securities market.
SEBI/IMD/CIR No. 14/120784/08
March 18, 2008
Sub: Load on Bonus Units and units allotted on Reinvestment of Dividend
1. The practice of charging load on bonus units issued to unit holders by mutual
funds was taken up with AMFI. Based on the recommendations of AMFI
Working Group on Standardization of Key Operational Areas, it was decided
that AMCs shall not charge entry as well as exit load on Bonus units and of
units allotted on reinvestment of Dividend.
2. While necessary advice in this regard is already being given to Mutual Funds
at the time of filing of draft offer documents, AMCs are hereby advised to
make necessary disclosures in this regard in the draft offer documents filed
with SEBI.
3. The provisions of this circular shall also be applicable to redemption by
existing unit holders with effect from April 1, 2008. Necessary addendum may
be issued by the AMCs in this regard.
4. This circular is issued in exercise of powers conferred under Section 11 (1) of
the Securities and Exchange Board of India Act, 1992, read with the
provisions of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996, to
protect the interests of investors in securities and to promote the development
of, and to regulate the securities market.
Operationalisation of Short Selling and Securities Lending and Borrowing
SEBI Market Regulation Department-Division of Policy
MRD/DoP/SE/Cir- 05 /2008
March 19, 2008
SEBI vide circular dated December 20, 2007 had specified the broad framework for short selling by institutional investors and a full-fledged securities lending and borrowing scheme for all market participants.
It has been decided to operationalise the above with effect from Monday, April 21, 2008.
The Stock Exchanges and the Depositories are advised to :
3.1 make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.
3.2 bring the provisions of this circular to the notice of the member brokers/clearing members, depository participants and also disseminate the same on their website.
3.3 communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report.
This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 and Section 19 of the Depositories Act, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
MRD/DoP/SE/Cir- 05 /2008
March 19, 2008
SEBI vide circular dated December 20, 2007 had specified the broad framework for short selling by institutional investors and a full-fledged securities lending and borrowing scheme for all market participants.
It has been decided to operationalise the above with effect from Monday, April 21, 2008.
The Stock Exchanges and the Depositories are advised to :
3.1 make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.
3.2 bring the provisions of this circular to the notice of the member brokers/clearing members, depository participants and also disseminate the same on their website.
3.3 communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report.
This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 and Section 19 of the Depositories Act, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Wednesday, March 19, 2008
Consultative Paper - Investor Protection and Education Fund
Securities and Exchange Board of India
Consultative Paper on Draft Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2008
March 18, 2008
1.0 Background
1.1 In terms of section 11 of the SEBI Act it is the duty of SEBI to protect the interests of investors in securities and to promote the development and to regulate the securities market by such measures as it thinks fit and such measures may provide for promoting investors education and training of the intermediaries. Investor education is very relevant in the context of complexities involved in the securities market. In order to enable the investors to understand and appreciate the risk factors associated with investments in securities, investor education and awareness is very important. Therefore, to achieve the objective of investor protection by investor education and investor awareness it is desirable to set up the Investor Protection and Education Fund under the aegis of SEBI.
1.2 Dr. N.L. Mitra in his study on investor protection had recommended establishment of a separate fund namely Investor Protection Fund to be administered by SEBI.?
1.3 The Joint Parliamentary Report (JPC) on Securities scam of 2001 had recommended that in order to enable SEBI to undertake investor education and awareness campaign effectively, the investor education and protection fund established under section 205A of the Companies Act and investor education resources of RBI should be shifted to SEBI and a joint campaign for investor education and awareness under the leadership of SEBI be undertaken.
1.4 The Honble Finance Minister in his Budget Speech for the year 2006-2007 had inter alia proposed as under :-
?to set up an Investor Protection Fund under the aegis of SEBI, funded by fines and penalities recovered by SEBI. This will bolster confidence among retail investors who should be the key drivers of the capital market.
1.5 The expert group headed by Justice M. H. Kania, Former Chief Justice of India had also recommended amendments to SEBI Act, 1992 to provide for establishment of an Investor Education and Protection Fund under the SEBI Act, 1992 and crediting of certain amounts including the unclaimed monies lying with the intermediaries for 7 years and amounts realized by way of penalties under the SEBI Act, the Depositories Act, 1996 and the Securities Contracts (Regulation) Act, 1956 to the said Fund.
2.0 International Practice
2.1 In United States of America the Fair Funds established under the Sarbanes Oxley Act, 2002 comprising of amount of disgorgement proceeds received under any judicial or administrative action by SEC or under the settlement proceedings are used for the benefit of the injured investors.
3.0 Legislative Precedents in India
3.1 The Pension Fund Regulatory and Development Authority, Ordinance, 2004 which mandated the Pension Fund Regulatory and Development Authority (PFRDA) to protect the interest of subscribers to the schemes of pension funds had provided for establishment of the Subscriber Education and Protection Fund under the aegis of PFRDA.
3.2 The Telecom Regulatory Authority of India ( TRAI) which has similar objectives as that of SEBI with respect to protection of interests of service providers and the consumers of the telecom sector has similar duties and functions as that of SEBI under section 11 of the SEBI Act. Its regulation making power under section 36 of the Telecom Regulatory Authority of India, Act, 1997 ( TRAI Act)? is pari materia the regulation making power of SEBI under section 30 of the SEBI Act.
3.3 In order to carry out one of the purposes of the TRAI Act to protect the interests of consumers of the telecom sector, TRAI has made ?Telecommunications Consumer Education and Protection Fund Regulations, 2007? under section 36 of the TRAI Act.? ?????????
4.0 Creation of SEBI Investor Protection and Education Fund
4.1 Under section 14 of the SEBI Act, the SEBI General Fund can be applied for meeting inter alia the expenses on objects and for purposes authorized under the SEBI Act. One of such purpose if investor education and protection. While the amendment to SEBI Act is yet to be effected for the purpose of crediting certain amounts as stated which can be credited by suitable amendments in the SEBI Act, SEBI has, by way of an executive order under section 11 of the SEBI Act passed on 23rd July, 2007, has created an ?Investor Protection and Education Fund? (Fund) by crediting an initial corpus of Rupees 10 Crores out of SEBI General Fund.
5.0 ?The draft Regulations ?
5.1 In order to maintain the transparency in the administration of Fund and for proper utilization of Fund for identified objects it is appropriate for SEBI to make regulations to carry out the purposes of the SEBI Act with respect to the investor education and protection.
5.2 As stated above SEBI has duty to protect interests of investors and such duty takes within its fold the duty to specify the manner of utilization of monies? which belongs to investors but cannot be refunded to the concerned investor and are lying unclaimed and also the other? monies which can be used for the investor protection.
5.3 ? The mechanism of crediting such monies and utilization of such monies for investor protection and education is proposed to be specified by way of regulation made under section 30 of the SEBI Act. Accordingly, the Draft Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2008 ( the Draft Regulations)? is annexed with this Consultative Paper.?
6.0?? Salient Features of the Draft Regulations
6.1?? The regulations provides for object of utilization of the Fund and the mechanism for administration of the Fund. The Fund shall be used for the purpose of protection of investors and for educating the investors. Funds shall be utilized by the Board for the specified objective on the recommendation of a Committee constituted in accordance with the proposed Regulations which shall inter alia consist of members from amongst the officials of SEBI, representatives of intermediaries and Stock Exchanges and Investors Associations.
6.2?? The Regulations also provide for the procedure to be adopted by the Committee and the maintenance and audit of accounts.
?7.0? Regulatory Impact Assessment
7.1?? The Regulations are proposed to carry out the purposes of the Act effectively ???as suggested by various Expert Groups and The Joint Parliamentary Committee on a stock market scam. In implementing the regulations there will be a cost attached to the administration of the Fund like expenses relating to meetings of the committee, audit of the committee, etc. On the other hand, benefits attached to their implementation includes awareness amongst investors relating to risks involved in the market which will help in developing an informed investor base and safer market in India. Thus benefits justify the cost involved.
8.0?? Comments are invited from the public on the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2008. The comments may be sent by e-mail upto April 10, 2008 to the following addresses
santoshs@sebi.gov.in (Mr. Santosh Shukla, Deputy Legal Adviser)
anubhavr@sebi.gov.in (Mr. Anubhav Roy, Legal Officer)
Comments may also be sent physically to the following address, so as to reach latest by April 10, 2008 ?
Mr. Santosh Shukla, Deputy Legal Advisor,
Division of Policy, Legal Affairs Department,
Securities and Exchange Board of India,
SEBI Bhavan, C-4A, G-Block,
Bandra Kurla Complex, Mumbai ? 400051
Consultative Paper on Draft Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2008
March 18, 2008
1.0 Background
1.1 In terms of section 11 of the SEBI Act it is the duty of SEBI to protect the interests of investors in securities and to promote the development and to regulate the securities market by such measures as it thinks fit and such measures may provide for promoting investors education and training of the intermediaries. Investor education is very relevant in the context of complexities involved in the securities market. In order to enable the investors to understand and appreciate the risk factors associated with investments in securities, investor education and awareness is very important. Therefore, to achieve the objective of investor protection by investor education and investor awareness it is desirable to set up the Investor Protection and Education Fund under the aegis of SEBI.
1.2 Dr. N.L. Mitra in his study on investor protection had recommended establishment of a separate fund namely Investor Protection Fund to be administered by SEBI.?
1.3 The Joint Parliamentary Report (JPC) on Securities scam of 2001 had recommended that in order to enable SEBI to undertake investor education and awareness campaign effectively, the investor education and protection fund established under section 205A of the Companies Act and investor education resources of RBI should be shifted to SEBI and a joint campaign for investor education and awareness under the leadership of SEBI be undertaken.
1.4 The Honble Finance Minister in his Budget Speech for the year 2006-2007 had inter alia proposed as under :-
?to set up an Investor Protection Fund under the aegis of SEBI, funded by fines and penalities recovered by SEBI. This will bolster confidence among retail investors who should be the key drivers of the capital market.
1.5 The expert group headed by Justice M. H. Kania, Former Chief Justice of India had also recommended amendments to SEBI Act, 1992 to provide for establishment of an Investor Education and Protection Fund under the SEBI Act, 1992 and crediting of certain amounts including the unclaimed monies lying with the intermediaries for 7 years and amounts realized by way of penalties under the SEBI Act, the Depositories Act, 1996 and the Securities Contracts (Regulation) Act, 1956 to the said Fund.
2.0 International Practice
2.1 In United States of America the Fair Funds established under the Sarbanes Oxley Act, 2002 comprising of amount of disgorgement proceeds received under any judicial or administrative action by SEC or under the settlement proceedings are used for the benefit of the injured investors.
3.0 Legislative Precedents in India
3.1 The Pension Fund Regulatory and Development Authority, Ordinance, 2004 which mandated the Pension Fund Regulatory and Development Authority (PFRDA) to protect the interest of subscribers to the schemes of pension funds had provided for establishment of the Subscriber Education and Protection Fund under the aegis of PFRDA.
3.2 The Telecom Regulatory Authority of India ( TRAI) which has similar objectives as that of SEBI with respect to protection of interests of service providers and the consumers of the telecom sector has similar duties and functions as that of SEBI under section 11 of the SEBI Act. Its regulation making power under section 36 of the Telecom Regulatory Authority of India, Act, 1997 ( TRAI Act)? is pari materia the regulation making power of SEBI under section 30 of the SEBI Act.
3.3 In order to carry out one of the purposes of the TRAI Act to protect the interests of consumers of the telecom sector, TRAI has made ?Telecommunications Consumer Education and Protection Fund Regulations, 2007? under section 36 of the TRAI Act.? ?????????
4.0 Creation of SEBI Investor Protection and Education Fund
4.1 Under section 14 of the SEBI Act, the SEBI General Fund can be applied for meeting inter alia the expenses on objects and for purposes authorized under the SEBI Act. One of such purpose if investor education and protection. While the amendment to SEBI Act is yet to be effected for the purpose of crediting certain amounts as stated which can be credited by suitable amendments in the SEBI Act, SEBI has, by way of an executive order under section 11 of the SEBI Act passed on 23rd July, 2007, has created an ?Investor Protection and Education Fund? (Fund) by crediting an initial corpus of Rupees 10 Crores out of SEBI General Fund.
5.0 ?The draft Regulations ?
5.1 In order to maintain the transparency in the administration of Fund and for proper utilization of Fund for identified objects it is appropriate for SEBI to make regulations to carry out the purposes of the SEBI Act with respect to the investor education and protection.
5.2 As stated above SEBI has duty to protect interests of investors and such duty takes within its fold the duty to specify the manner of utilization of monies? which belongs to investors but cannot be refunded to the concerned investor and are lying unclaimed and also the other? monies which can be used for the investor protection.
5.3 ? The mechanism of crediting such monies and utilization of such monies for investor protection and education is proposed to be specified by way of regulation made under section 30 of the SEBI Act. Accordingly, the Draft Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2008 ( the Draft Regulations)? is annexed with this Consultative Paper.?
6.0?? Salient Features of the Draft Regulations
6.1?? The regulations provides for object of utilization of the Fund and the mechanism for administration of the Fund. The Fund shall be used for the purpose of protection of investors and for educating the investors. Funds shall be utilized by the Board for the specified objective on the recommendation of a Committee constituted in accordance with the proposed Regulations which shall inter alia consist of members from amongst the officials of SEBI, representatives of intermediaries and Stock Exchanges and Investors Associations.
6.2?? The Regulations also provide for the procedure to be adopted by the Committee and the maintenance and audit of accounts.
?7.0? Regulatory Impact Assessment
7.1?? The Regulations are proposed to carry out the purposes of the Act effectively ???as suggested by various Expert Groups and The Joint Parliamentary Committee on a stock market scam. In implementing the regulations there will be a cost attached to the administration of the Fund like expenses relating to meetings of the committee, audit of the committee, etc. On the other hand, benefits attached to their implementation includes awareness amongst investors relating to risks involved in the market which will help in developing an informed investor base and safer market in India. Thus benefits justify the cost involved.
8.0?? Comments are invited from the public on the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2008. The comments may be sent by e-mail upto April 10, 2008 to the following addresses
santoshs@sebi.gov.in (Mr. Santosh Shukla, Deputy Legal Adviser)
anubhavr@sebi.gov.in (Mr. Anubhav Roy, Legal Officer)
Comments may also be sent physically to the following address, so as to reach latest by April 10, 2008 ?
Mr. Santosh Shukla, Deputy Legal Advisor,
Division of Policy, Legal Affairs Department,
Securities and Exchange Board of India,
SEBI Bhavan, C-4A, G-Block,
Bandra Kurla Complex, Mumbai ? 400051
COMMENCEMENT/ RECOMMENCEMENT OF TRADING
Price Bands for COMMENCEMENT/ RECOMMENCEMENT OF
TRADING OF SECURITIES.
Currently, the stock exchanges have a policy for imposition of price band on first day ofcommencement/recommencement of trading in respect of cases of merger, de-merger,amalgamation, capital reduction, scheme of arrangement, revocation of suspension,direct listing on another stock exchange while being listed on one exchange.
II. SEBI has received representations expressing concerns of effect of price band on price discovery in cases of merger, de-merger, amalgamation, capital reduction and scheme of arrangement.
III. In consultation with the stock exchanges, it has been decided that in cases of merger, demerger,amalgamation, capital reduction, scheme of arrangement, in terms of the Companies Act and/or as sanctioned by the Courts, in cases of rehabilitation packages approved by the Board of Industrial and Financial Reconstruction under Sick Industrial Companies Act and in cases of Corporate Debt Restructuring (CDR) packages by the CDR Cell of the RBI, there is no need to have a price band on the first day of
commencement/recommencement of trading. The price band may be retained in all
other cases on the first day.
IV. Applicability
The above policy may come into force with immediate effect.
V. Direction to Stock Exchanges
Stock Exchanges are advised to give effect to the abovementioned policy and
communicate to SEBI, the status of implementation of the requirements of this circular in the next Monthly Development Report.
ISD/SR/Circ/120185/2008
March 12, 2008
TRADING OF SECURITIES.
Currently, the stock exchanges have a policy for imposition of price band on first day ofcommencement/recommencement of trading in respect of cases of merger, de-merger,amalgamation, capital reduction, scheme of arrangement, revocation of suspension,direct listing on another stock exchange while being listed on one exchange.
II. SEBI has received representations expressing concerns of effect of price band on price discovery in cases of merger, de-merger, amalgamation, capital reduction and scheme of arrangement.
III. In consultation with the stock exchanges, it has been decided that in cases of merger, demerger,amalgamation, capital reduction, scheme of arrangement, in terms of the Companies Act and/or as sanctioned by the Courts, in cases of rehabilitation packages approved by the Board of Industrial and Financial Reconstruction under Sick Industrial Companies Act and in cases of Corporate Debt Restructuring (CDR) packages by the CDR Cell of the RBI, there is no need to have a price band on the first day of
commencement/recommencement of trading. The price band may be retained in all
other cases on the first day.
IV. Applicability
The above policy may come into force with immediate effect.
V. Direction to Stock Exchanges
Stock Exchanges are advised to give effect to the abovementioned policy and
communicate to SEBI, the status of implementation of the requirements of this circular in the next Monthly Development Report.
ISD/SR/Circ/120185/2008
March 12, 2008
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