New norms for FPIs.In light of the recent changes made to the Know Your Client norms which are applicable to offshore derivates instruments (ODIs) beginning July 1, 2016, a clarification note has been issued by the SEBI..Foreign Portfolio Investors (FPIs) who had issued ODIs to subscribers under the erstwhile regulations have been allowed to hold the position under the new regime so long as they comply with Regulations 22 of the SEBI (FPI) Regulations, 2014 and the conditions laid down in this circular..If not, these investments will be grandfathered till the date of expiry of such positions or till December 31, 2020, whichever is earlier, giving ample time for holders to take a call. Further, non-compliance with the above mentioned conditions will not be allowed to issue fresh ODIs as well..BSE & NSE as electronic book providers.For private placement of debt securities with an issue size of Rs. 500 crore and above, SEBI had earlier in April issued a circular mandating the use of electronic book mechanism (EBM)..The Circular inter alia stated that the facility of EBM may be provided only by recognised stock exchanges upon approval by the SEBI..Pursuant to the said circular, SEBI has granted approval to the National Stock Exchange and Bombay Stock Exchange to act as electronic book providers. All types of investors and arrangers are allowed to bid through this mechanism..For issues with a value of less than Rs. 500 crores, the issuer shall disclose the details to the electronic book provider and/ or to the information repository for corporate debt market..Master Directions by RBI.The Reserve Bank of India has issued a series of Master Directions consolidating all circulars/notifications contained therein respectively..1. Relief/ Savings Bonds.Relief bonds are widely considered to be one of the safest investment options. The interest received on these bonds is also exempted from tax. The directions, inter alia, provides for procedures in relation to registration of brokers, appointment of sub-agents by agency bank and delisting of brokers who have been dormant for two years..2. Relief Measures by Banks in Areas Affected by Natural Calamities.These directions spell out the institutional framework required to be adopted by the Banks in the event of natural calamities (as defined in the National Disaster Management Framework) which inter alia requires banks to establish policies and vest certain discretionary power with the boards of the Banks. Other than that, the directions contain provisions with respect to restructuring of loans, sanctioning of fresh loans and other ancillary relief measures for people affected by such calamities..3. Frauds – Classification and Reporting by commercial banks and select FIs.These directions are issued with a view to ensure effective fraud risk management by banks by providing them with an enabling framework to detect and report frauds early and taking timely consequent actions. The directions inter alia provide classification of frauds into different types and various reporting requirements to be followed by the banks..4. Primary Dealers.These directions are issued in furtherance of the introduction of the system of Primary Dealers, with a view to strengthen the infrastructure in the Government Securities Market. The directions inter alia provide for eligibility conditions for PDs, their roles and obligations and primary and secondary market activities to be undertaken by the PDs..Government eases funding for startups.The MCA recently notified the Companies (Acceptance of Deposit) Amendment Rules, 2016 by expanding the list of exempted deposits. Among other things, funds received by a startup amounting to Rs 25 lakh or more by way of convertible note, in a single trance from a person, will not be treated as a ‘deposit’ provided the convertible note is either converted into equity or repaid within a period of five years..This is the second initiative taken by the government lately for making it easier for startups to access capital after the withdrawal of ‘angel tax’ payment for startups..Further, for public companies the limit for acceptance of deposits from members has been increased to 35% from the existing 25% and upto 100% for private companies.
New norms for FPIs.In light of the recent changes made to the Know Your Client norms which are applicable to offshore derivates instruments (ODIs) beginning July 1, 2016, a clarification note has been issued by the SEBI..Foreign Portfolio Investors (FPIs) who had issued ODIs to subscribers under the erstwhile regulations have been allowed to hold the position under the new regime so long as they comply with Regulations 22 of the SEBI (FPI) Regulations, 2014 and the conditions laid down in this circular..If not, these investments will be grandfathered till the date of expiry of such positions or till December 31, 2020, whichever is earlier, giving ample time for holders to take a call. Further, non-compliance with the above mentioned conditions will not be allowed to issue fresh ODIs as well..BSE & NSE as electronic book providers.For private placement of debt securities with an issue size of Rs. 500 crore and above, SEBI had earlier in April issued a circular mandating the use of electronic book mechanism (EBM)..The Circular inter alia stated that the facility of EBM may be provided only by recognised stock exchanges upon approval by the SEBI..Pursuant to the said circular, SEBI has granted approval to the National Stock Exchange and Bombay Stock Exchange to act as electronic book providers. All types of investors and arrangers are allowed to bid through this mechanism..For issues with a value of less than Rs. 500 crores, the issuer shall disclose the details to the electronic book provider and/ or to the information repository for corporate debt market..Master Directions by RBI.The Reserve Bank of India has issued a series of Master Directions consolidating all circulars/notifications contained therein respectively..1. Relief/ Savings Bonds.Relief bonds are widely considered to be one of the safest investment options. The interest received on these bonds is also exempted from tax. The directions, inter alia, provides for procedures in relation to registration of brokers, appointment of sub-agents by agency bank and delisting of brokers who have been dormant for two years..2. Relief Measures by Banks in Areas Affected by Natural Calamities.These directions spell out the institutional framework required to be adopted by the Banks in the event of natural calamities (as defined in the National Disaster Management Framework) which inter alia requires banks to establish policies and vest certain discretionary power with the boards of the Banks. Other than that, the directions contain provisions with respect to restructuring of loans, sanctioning of fresh loans and other ancillary relief measures for people affected by such calamities..3. Frauds – Classification and Reporting by commercial banks and select FIs.These directions are issued with a view to ensure effective fraud risk management by banks by providing them with an enabling framework to detect and report frauds early and taking timely consequent actions. The directions inter alia provide classification of frauds into different types and various reporting requirements to be followed by the banks..4. Primary Dealers.These directions are issued in furtherance of the introduction of the system of Primary Dealers, with a view to strengthen the infrastructure in the Government Securities Market. The directions inter alia provide for eligibility conditions for PDs, their roles and obligations and primary and secondary market activities to be undertaken by the PDs..Government eases funding for startups.The MCA recently notified the Companies (Acceptance of Deposit) Amendment Rules, 2016 by expanding the list of exempted deposits. Among other things, funds received by a startup amounting to Rs 25 lakh or more by way of convertible note, in a single trance from a person, will not be treated as a ‘deposit’ provided the convertible note is either converted into equity or repaid within a period of five years..This is the second initiative taken by the government lately for making it easier for startups to access capital after the withdrawal of ‘angel tax’ payment for startups..Further, for public companies the limit for acceptance of deposits from members has been increased to 35% from the existing 25% and upto 100% for private companies.
