• ACT FOR RECOGNITION OF STOCK EXCHANGES BY THE CENTRAL GOVERNMENT

• EXTENDS TO THE WHOLE OF INDIA

• IN PARTICULAR TO
• CAME INTO FORCE IN FEBRUARY, 1957
RECOGNISED STOCK EXCHANGE (RSE)
• IN PARTICULAR TO STOCK EXCHANGE
STOCK EXCHANGE WHICH IS FOR THE TIME BEING OR RECOGINITION OF STOCK EXCHANGES
•
RECOGNISED BY THE CENTRAL GOVERNMENT.
BODY OF INDIVIDUALS BODY CORPORATE SECTION 3: TO BE RECOGNIZED STOCK EXCHANGE

CONSTITUTED
CORPORATISATION CONSTITUTED BEFORE INCORPORATED UNDER A SCHEME OF •CONTAIN SUCH PARTICULARS AS MAY
BEFORE APPLICATION
SUCCESSION OF A RECOGNISED STOCK EXCHANGE UNDER THE CORPORATISATION BE PRESCRIBED

DEMUTUALISATION COMPANIES ACT, AND

RSE BEING RSE BEING CORPORATISATION
2013 DEMUTUALISATION
COPY OF THE BYE- •REGULATION AND
LAWS CONTROL OF CONTRACTS
BODY OF
BY ANOTHER COMPANY
INDIVIDUALS DERIVATIVES COPY OF THE
INCORPORATED
OR A SOCIETY RULES
FOR THE PURPOSE
REGISTERED SECURITY DERIVED FROM
OF CONTRACT WHICH DERIVES ITS
UNDER THE ASSISTING DEBT INSTRUMENT, SHARE, LOAN, VALUE FROM THE PRICES OR INDEX
SOCIETIES WHETHER SECURED OR OF PRICES, OF UNDERLYING
CONTROLLING UNSECURED, RISK INSTRUMENT OR SECURITIES
REGISTRATION REGULATING CONTRACT FOR DIFFERENCES OR IN PARTICULAR
G IN GENERAL TO THE
ACT, 1860 ANY OTHER FORM OF SECURITY TO
THE BUSINESS OF BUYING, SELLING CONSTITUTION OF THE
OR DEALING IN SECURITIES STOCK EXCHANGE
INCLUDES

DEMUTUALISATION
SEGREGATION OF OWNERSHIP AND MANAGEMENT OTHER INSTRUMENTS AS MAY BE GOVERNING OFFICE ADMISSION OF PARTNERSHIPS
FROM COMMODITY DERIVATIVES DECLARED BY THE CENTRAL BODY BEARERS MEMBERS AS MEMBERS
THE TRADING RIGHTS OF THE MEMBERS OF A RECOGNISED STOCK EXCHANGE GOVERNMENT
IN ACCORDANCE WITH A SCHEME APPROVED BY THE SEBI SECTION 4: CENTRAL GOVERNMENT OR SEBI
AFTER MAKING SUCH INQUIRY
(+)
SPOT DELIVERY CONTRACT AFTER OBTAINING SUCH FURTHER INFORMATION
WITHDRAWAL RECOGINITION OF STOCK EXCHANGES
CONTRACT RULES AND BYE- STOCK EXCHANGE IS IN THE INTEREST OF
CENTRAL GOVERNMENT IS OF OPINION THAT
LAWS ARE IN WILLING TO THE TRADE AND
WHEN SUCH SECURITIES ARE DEALT THE RECOGNITION GRANTED TO A STOCK EXCHANGE CONFORMITY COMPLY WITH ANY ALSO IN THE PUBLIC
ACTUAL DELIVERY OF SECURITIES
(+) PAYMENT OF A PRICE WITH BY A DEPOSITORY SHOULD CONDITIONS OTHER CONDITIONS INTEREST
TRANSFER OF THE SECURITIES BY
THE DEPOSITORY IN THE INTEREST OF THE TRADE OR IN THE PUBLIC INTEREST
ON THE SAME DAY
FROM ONE ACCOUNT TO ANOTHER
OR ACCOUNT OF BENEFICIAL OWNER STEP 1 •CENTRAL GOVERNMENT MAY SERVE ON THE GOVERNING
ON THE NEXT DAY BODY GRANT RECOGNITION PUBLISHED IN THE
•GIVING AN OPPORTUNITY TO THE GOVERNING BODY TO BE TO THE STOCK GAZETTE OF INDIA
STEP 2 EXCHANGE SUBJECT AND ALSO IN THE
HEARD
TO THE CONDITIONS OFFICIAL GAZETTE
•WITHDRAW THE RECOGNITION BY NOTIFICATION IN THE IMPOSED UPON IT OF THE STATE
GOVERNMENT SECURITY STEP 3
OFFICIAL GAZETTE
SECURITY CREATED AND ISSUED
BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT
FOR THE PURPOSE OF RAISING A PUBLIC LOAN
 POWERS OF RECOGNISED STOCK EXCHANGE PUBLIC ISSUE AND LISTING OF SECURITIES REFUSAL TO LIST SECURITIES BY
POWERS OF CENTRAL GOVERNMENT STOCK EXCHANGES
❖ MAKE RULES RESTRICTING VOTING RIGHTS EVERY ISSUER BEFORE ISSUING THE OFFER DOCUMENT TO THE PUBLIC
TO DIRECT ❖ TO MAKE BYE-LAWS MAKE AN APPLICATION
TO ISSUE RULES OR
DIRECTIONS MAKE RULES TO ONE OR MORE RECOGNIZED STOCK EXCHANGES FOR GRANTING TO
PERMISSION SECURITIES APPELLATE
POWERS OF SECURITIES EXCHANGE TRIBUNAL (SAT)
TO CALL FOR TO SUSPEND BOARD OF INDIA ❖ WITHIN 15 DAYS FROM THE
PERIODICAL BUSINESS OF DATE OF REFUSAL
TO GRANT RECOGNISED
IMMUNITY RETURNS AND TO MAKE OR TO MAKE TO MAKE ❖ EVERY APPEAL SHALL BE IN SUCH
MAKE DIRECT STOCK
AMEND BYE- REGULATIONS REGULATIONS FORM AS PRESCRIBED
ENQUIRIES EXCHANGE IF PERMISSION IS NOT GRANTED IF PERMISSION IS
LAWS OF ANY ❖ BE ACCOMPANIED BY SUCH FEE
RSE REPAY ALL MONEYS WITHIN EIGHT DAYS GRANTED
AS MAY BE PRESCRIBED
TO PROHIBIT RECEIVED FROM APPLICANTS IN
TO DELEGATE CONTRACTS PURSUANCE OF THE OFFER DOCUMENT SHALL COMPLY
OR TO MAKE IN CERTAIN WITH THE THE APPEAL FILED BEFORE THE
RULES CASES FAILS SECURITIES APPELLATE TRIBUNAL
CONDITIONS OF
SHALL BE DEALT WITH BY IT AS
REPAY THAT MONEY WITH INTEREST AT THE THE LISTING
EXPEDITIOUSLY AS POSSIBLE
RATE OF 15%p.a. AGREEMENT AND
TO
SUPERSEDE EVERY DIRECTOR OR TRUSTEE WHO IS IN WITH THAT DISPOSE OFF THE APPEAL FINALLY
COMPANIES DEFAULT SHALL BE JOINTLY AND SEVERALLY STOCK WITHIN SIX MONTHS FROM THE
OF STOCK LIABLE EXCHANGE DATE OF RECEIPT OF THE APPEAL
EXCHANGES

RIGHT TO RECEIVE INCOME OR DIVIDEND FROM •PENALTY FOR FAILURE TO FURNISH PERIODICAL RETURNS,
COLLECTIVE INVESTMENT SCHEME/ ETC
MUTUAL FUND OR COMPANY •PENALTY FOR FAILURE TO COMPLY WITH LISTING
5 LAKH – 25 CRORES CONDITIONS OR DELISTING CONDITIONS SECURITIES APPELLATE TRIBUNAL (SAT)
HOLDER OF ANY SECURITIES •PENALTY FOR EXCESS DEMATERIALIZATION OR DELIVERY OF
UNLISTED SECURITIES
NAME APPEARS ON THE BOOKS OF THE ISSUER
SHALL SEND A
MAY VARY OR
•PENALTY FOR FAILURE TO FURNISH INFORMATION, RETURN COPY OF EVERY
RECEIVE AND RETAIN ANY INCOME IN RESPECT OF UNITS OR SET ASIDE THE
1 LAKH/DAY (UPTO ETC.
DECISION OF THE
ORDER MADE BY
OTHER INSTRUMENTS ISSUED •PENALTY FOR FAILURE BY ANY PERSON TO ENTER INTO
MAX. 1 CRORES) AGREEMENT WITH CLIENT STOCK
IT TO SEBI AND
PARTIES TO THE
•PENALTY FOR FAILURE TO ADDRESS INVESTORS GRIEVANCES EXCHANGE
APPEAL

•PENALTY FOR FAILURE TO SEGREGATE SECURITIES OR

1 LAKH – 1 CRORES MONEY OF CLIENTS SPECIAL COURT
TRANSFEREE HAS NOT TRANSFERORS NAME
YET REGISTERED THE APPEAR IN THE BOOKS •PENALTY FOR CONTRAVENTION WHERE NO SEPARATE
PENALTY HAS BEEN PROVIDED
SECURITY IN HIS NAME OF ACCOUNTS
\ PENALTY AMOUNT COLLECTED →CREDITED TO THE CONSOLIDATED FUND OF INDIA
TRANSFEREE CANCLAIM THE INCOME OR DIVIDEND IF HE MAKES  ESTABLISH OR DESIGNATE BY CENTRAL GOVERNMENT
APPLICATION WITHIN 15 DAYS FROM DECLARATION OF THE FACTORS UNDERTAKEN BY RECOVERY OF AMOUNT BY
 FOR THE PURPOSE OF PROVIDING SPEEDY TRIAL OF
INCOME OR DIVIDEND ADJUDICATING OFFICER ADJUDICATING OFFICER OFFENCES UNDER THIS ACT
 CONSIST OF A SINGLE JUDGE
• AMOUNT OF DISPROPORTIONATE • ATTACHMENT - IMMOVABLE PROPERTY  JUDGE APPOINTED BY THE CENTRAL GOVERNMENT
GAIN OR UNFAIR ADVANTAGE - MOVABLE PROPERTY WITH THE CONCURRENCE OF THE CHIEF JUSTICE OF THE
• AMOUNT OF LOSS CAUSED - BANK ACCOUNTS HIGH COURT OF THE JURISDICTION
• REPETITIVE NATURE OF THE • ARREST OF THE PERSON AND HIS  QUALIFICATION FOR JUDGE: HOLDING THE OFFICE OF A
DEFAULT DETENTION IN PRISON SESSIONS JUDGE OR AN ADDITIONAL SESSIONS JUDGE
• APPOINTING A RECEIVER  THE CODE OF CRIMINAL PROCEDURE, 1973 SHALL
APPLY TO THE PROCEEDING BEFORE A SPECIAL COURT
REQUIREMENTS OF LISTING OF SECURITIES
WITH RECOGNISED STOCK EXCHANGES
A PUBLIC COMPANY DESIROUS OF GETTING ITS SECURITIES LISTED ON A
RECOGNISED STOCK EXCHANGE
MINIMUM OFFER AND ALLOTMENT TO PUBLIC
ALSO KNOWN AS
COMPLIANCE OF CONTINUOUS LISTING AGREEMENT

APPLY TO THE STOCK EXCHANGE

FORWARD ALONG WITH ITS APPLICATION FOLLOWING DOCUMENTS POST ISSUE CAPITAL
MINIMUM ALLOTMENT TO PUBLIC
(CALCULATED AT OFFER PRICE)
 MOA AND AOA
 COPIES OF ALL PROSPECTUSES OR STATEMENTS IN LIEU OF LESS THAN OR EQUAL TO 1600 SHUBHAMM
CRORE 25 %
PROSPECTUSES
 COPIES OF BALANCE SHEETS AND AUDITED ACCOUNTS FOR THE LAST SUKHLECHA
FIVE YEARS 1600 – 4000 CRORE 400 CRORE
 PARTICULARS OF SHARES FORFEITED.
(CA, CS, LLM)
 PARTICULARS OF SHARES OR DEBENTURES FOR WHICH PERMISSION TO MORE THAN 4000 CRORE 10 %
DEAL IS APPLIED FOR
 CERTIFIED COPIES OF AGREEMENTS OR OTHER DOCUMENTS RELATING
TO ARRANGEMENTS WITH OR BETWEEN –
i. VENDORS AND/OR PROMOTERS,
ii. UNDERWRITERS AND SUB-UNDERWRITERS, LOSSES 3
iii. BROKERS AND SUB-BROKERS. CONSECUTIVE
YEARS AND
 CERTIFIED COPIES OF AGREEMENTS WITH –
NEGATIVE
i. MANAGING AGENTS AND SECRETARIES AND TREASURERS NETWORTH
SHAREHOLDING
ii. SELLING AGENTS OF THE TRADING
iii. MANAGING DIRECTORS AND TECHNICAL DIRECTORS COMPANY HELD REMAINED
BY THE PUBLIC SUSPENDED
iv. GENERAL MANAGER, SALES MANAGER, MANAGERS OR HAS COME FOR A PERIOD
SECRETARY BELOW THE OF MORE THAN
MINIMUM LEVEL SIX MONTHS
REQUIRED
STOCK EXCHANGE SHALL BE SATISFIED DELISTING
OF
SECURITIES
SECURITIES
COMPANY REMAINED
/PROMOTERS INFREQUENTLY
AOA OF THE COMPANY COMPANY SHOULD SATISFY /DIRECTOR - TRADED
SHOULD INCLUDE ALL THE PROVISIONS RELATING TO FURNISH FALSE DURING THE
REQUIRED CLAUSES MINIMUM OFFER AND ADDRESS TO ROC PRECEDING
ALLOTMENT TO PUBLIC COMPANY
/PROMOTERS THREE YEARS
/DIRECTOR
CONVICTED FOR
FAILURE TO
COMPLY WITH
SEBI/ DEPOSITORY
ACT
Securities and Exchange Board of India Act, 1992
PROTECT THE INTERESTS OF
CHAIRMAN INVESTORS IN SECURITIES
9

2 MEMBERS-MINISTRY OF OBJECTIVE PROMOTE THE

CENTRAL GOVERNMENT DEALING OF SEBI DEVELOPMENT OF
WITH SECURITIES MARKET HEAD OFFICE AT MUMBAI
FINANCE & ADMINISTRATION REGULATE, THE SECURITIES AND HAS POWERS TO ESTABLISH ITS
MARKET AND MATTERS OFFICES AT OTHER PLACES IN INDIA
1 MEMBER OF RESERVE BANK OF INDIA CONNECTED TO IT

5 OTHER MEMBERS APPOINTED BY CENTRAL

GOVERNMENT
AMONG 3 SHALL BE WHOLE TIME MEMBERS
REGISTRATION OF INTERMEDIARIES

✓ INTERMEDIARIES ARE REQUIRED TO OBTAIN A REGISTRATION CERTIFICATE FROM SEBI

➢ TO BUY
FUNCTIONS AND POWERS OF SEBI ➢ TO SELL IN SECURITIES
➢ TO DEAL
 THE DUTY OF SEBI  TO PROTECT THE INTERESTS OF THE INVESTORS IN SECURITIES ✓ FOR REGISTRATION → APPLICATION SUCH MANNER
DETERMINED BY SEBI REGULATIONS
 TO PROMOTE THE DEVELOPMENT SECURITIES MARKETS → PAYMENT OF SUCH FEES
 TO REGULATE THE SECURITIES MARKETS ✓ SEBI MAY, AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD BY ORDER, SUSPEND OR CANCEL A CERTIFICATE OF
 TAKE MEASURES TO UNDERTAKE INSPECTION OF REGISTRATION, IN SUCH MANNER AS MAY BE DETERMINED BY SEBI REGULATIONS.
 ANY BOOK  OTHER DOCUMENT
 REGISTER  RECORD OF ANY LISTED PUBLIC COMPANY
 VESTED WITH THE SAME POWERS AS CIVIL COURT UNDER THE CODE OF CIVIL
PROCEDURE, 1908 FOR TRYING A SUIT IN RESPECT OF THE FOLLOWING MATTERS:
i.) DISCOVERY AND PRODUCTION OF BOOKS OF ACCOUNT AND OTHER DOCUMENTS
ii.) SUMMONING AND ENFORCING THE ATTENDANCE OF PERSONS AND EXAMINING
THEM ON OATH
iii.) INSPECTION WITH RESPECT TO BOOKS, REGISTERS AND OTHER DOCUMENTS OR
RECORD SHARE TRANSFER TRUSTEE OF TRUST
STOCK-BROKER SUB-BROKER BANKER TO AN ISSUE
(a) OF ANY PERSON LISTED IN SECTION 12 OF THE ACT AGENT DEED
(b) OF ANY LISTED COMPANY OR A PUBLIC COMPANY WHICH INTENDS TO
GET ITS SECURITIES LISTED ON ANY RECOGNIZED STOCK EXCHANGE
iv.) ISSUING COMMISSIONS FOR THE EXAMINATION OF WITNESSES OR DOCUMENTS
 REGULATE OR PROHIBIT ISSUE OF
o PROSPECTUS
o OFFER DOCUMENT SOLICITING MONEY FOR ISSUE OF SECURITIES
o ADVERTISEMENT
 REGULATE COLLECTIVE INVESTMENT SCHEMES REGISTRAR TO AN MERCHANT
UNDERWRITER
PORTFOLIO INVESTMENT
 POWER TO ISSUE DIRECTIONS AND ORDER INVESTIGATION ISSUE BANKER MANAGER ADVISER
 TO ORDER CEASE AND DESIST PROCEEDINGS SECTION

SHUBHAMM DEPOSITORY CUSTODIAN OF

FOREIGN
CREDIT RATING OTHER
SEBI INSTITUTIONAL
SUKHLECHA PARTICIPANT SECURITIES INVESTOR
AGENCY INTERMEDIARY
(CA, CS, LLM)
 PENALTY PROVISIONS ADJUDICATIONS

• NOT BELOW THE RANK

APPOINT OF DIVISION CHIEF
HIGHER OF HIGHER OF ADJUDICATING
NOT LESS THAN ₹ 1 Lac • FOR HOLDING INQUIRY
NOT LESS THAN ₹ 10 LAC BUT WHICH NOT LESS THAN ₹ 5 LAC BUT WHICH OFFICER AFTER GIVING PERSON
NOT LESS THAN ₹ 1 Lac
BUT EXTENT TO ₹1 LAC/DAY MAY EXTENT TO ₹ 25 CRORE MAY EXTENT TO ₹ 25 CRORE OPPORTUNITY OF
UPTO ₹ 1 CRORE
SUBJECT TO MAXIMUM ₹1 CRORE OR OR BEING HEARD
3 TIMES OF PROFIT MADE 3 TIMES OF PROFIT MADE
• IF UNDER ANY
CALL FOR EXAMINE PROCEEDING
• FAILURE TO FURNISH • NON-DISCLOSURE OF • FRAUDULENT AND • CONTRAVENTION ANY RECORD AND ADJUDICATING OFFICER
INFORMATION, RETURN WHERE NO SEPARATE PASS FRESH ORDER PASS ERRONEOUS
ACQUISITION OF SHARES UNFAIR TRADE
PENALTY HAS BEEN ORDER
ETC AND TAKEOVERS PRACTICES
• FAILURE BY ANY PERSON • INSIDER TRADING PROVIDED
TO ENTER INTO
AGREEMENT WITH POWER TO • ACQUAINTED WITH FACT
CLIENTS SUMMON AND AND CIRCUMSTANCE OF
• FAILURE TO REDRESS ENFORCE THE THE CASE
INVESTORS’ GRIEVANCES ATTENDENCE OF • TO GIVE EVIDENCE OR TO
• DEFAULT IN CASE OF ANY PERSON PRODUCE DOCUMENT ON
MUTUAL FUNDS INQUIRY
• FAILURE TO OBSERVE
RULES AND
REGULATIONS BY AN • IF HE SATISFIED THAT
ASSET MANAGEMENT IMPOSE SUCH PERSON HAS FAILED TO
COMPANY PENALTY AS HE COMPLY WITH THE
THINKS FIT
• DEFAULT IN CASE OF PROVISIONS
STOCK BROKER
•

FACTORS TO BE TAKEN INTO ACCOUNT BY THE AMOUNT OF LOSS CAUSED TO AN INVESTOR OR GROUP OF INVESTORS AS A RESULT OF THE DEFAULT
THE ADJUDICATING OFFICER WHILE
ADJUDGING THE AMOUNT OF PENALTY THE REPETITIVE NATURE OF THE DEFAULT

CENTRAL TO HEAR AND TO EXERCISE THE

ESTABLISHED GOVERNMENT IS DISPOSE OF JURISDICTION, POWER
SECURITIES UNDER THE EMPOWERED TO APPEALS AGAINST AND AUTHORITIES BY
APPELLATE PROVISIONS OF ESTABLISH BY ORDERS PASSED CONFERRED ON SUCH
TRIBUNAL IS A SECTION 15K OF NOTIFICATIONS BY THE SEBI OR BY TRIBUNAL BY SEBI ACT OR SHUBHAMM
STATUTORY BODY THE SEBI ACT, ONE OR MORE AN ADJUDICATING UNDER THE ACT OR ANY
OTHER LAW FOR THE SUKHLECHA
1992 APPELLATE OFFICER UNDER
TIME BEING IN FORCE (CA, CS, LLM)
TRIBUNALS, THE ACT
 RECOVERY OF AMOUNT RECOVERY OFFICER
COMPOSITION OF THE SECURITIES APPELLATE TRIBUNALS

Presiding Officer Judicial Member Technical Member PROCEED TO RECOVER AMOUNT BY THE
MAY DRAW UP
Qualification He is, or has been, a He is, or has been, a He is, or has been, a UNDER HIS FOLLOWING MODES:
Judge of the SC or Judge of High Court for at Secretary/Additional IF A PERSON FAILS TO:
SIGNATURE A i.) ATTACHMENT AND SALE OF THE
CJ of a High Court or least five years. Secretary/EP in the • PAY THE PENALTY IMPOSED
STATEMENT IN
BY THE ADJUDICATING PERSON’S MOVABLE PROPERTY OR
a Judge of High Court for Ministry or Department THE SPECIFIED
OFFICER IMMOVABLE PROPERTY
at least seven years. of Central/ State FORM SPECIFYING
• COMPLY WITH ANY ii.) ATTACHMENT OF THE PERSON’S BANK
Government; OR THE AMOUNT DUE
DIRECTION OF SEBI FOR
He is a person of proven FROM THE ACCOUNTS
REFUND OF MONIES
IAS having S knowledge PERSON iii.) ARREST OF THE PERSON AND HIS
• COMPLY WITH A DIRECTION
and P experience, of not (+) DETENTION IN PRISON
OF DISGORGEMENT ORDER
less than fifteen years, in ISSUED UNDER SECTION 11B SHALL PROCEED iv.) APPOINTING A RECEIVER FOR THE
financial sector. • PAY ANY FEES DUE TO SEBI TO RECOVER
MANAGEMENT OF THE PERSON’S
Appointed by Appointed by the Central Appointed by the Central Appointed by Central AMOUNT
MOVABLE AND IMMOVABLE PROPERTIES
Government in Government in Government on
consultation with Chief consultation with Chief recommendation of a
Justice of India or his Justice of India or his Search-cum-Selection
nominee. nominee. Committee CONSIST OF A SINGLE JUDGE WHO SHALL BE
tenure hold office for a term of five years and is eligible for reappointment for another APPOINTED BY THE CENTRAL GOVERNMENT
ESTABLISH BY CENTRAL GOVERNMENT AND WITH THE CONCURRENCE OF THE CHIEF
term of maximum five years. DESIGNATE AS MANY SPECIAL COURTS AS MAY JUSTICE OF THE HIGH COURT
Maximum age limit 70 years BE NECESSARY
NOT BE QUALIFIED UNLESS IMMEDIATELY
BEFORE SUCH APPOINTMENT, HOLDING THE
OFFICE OF A SESSIONS JUDGE OR AN
ADDITIONAL SESSIONS JUDGE
APPEAL TO SECURITIES APPELLATE TRIBUNAL
POWER OF
❖ ANY PERSON AGGRIEVED BY DECISION OF SEBI, RECOGNISED SECURITIES APPELLATE TRIBUNAL
STOCK EXCHANGE ADJUDICATING OFFICER SPECIAL COURT

FILE APPEAL TO SAT SECURITIES APPELLATE TRIBUNAL SHALL NOT BE BOUND BY
 THE PROCEDURE LAID DOWN BY THE CODE OF CIVIL PROVISIONS OF THE CODE OF CRIMINAL
PROCEDURE, 1908 (GUIDED BY THE PRINCIPLES OF APPEAL AGAINST THE SPECIAL COURT LIES TO
WITHIN 45 DAYS + 45 DAYS (EXTENSION IF SUFFICIENT CAUSE): - PROCEDURE, 1973 SHALL APPLY TO THE
THE HIGH COURT
• ORDER OF SEBI NATURAL JUSTICE) PROCEEDINGS BEFORE A SPECIAL COURT
• DECISION OF RECOGNISED STOCK EXCHANGE HOWEVER, IT HAS SAME POWERS AS ARE VESTED IN A CIVIL
• DECISION OF ADJUDICATING OFFICER COURT UNDER THE CODE OF CIVIL PROCEDURE, 1908,
❖ SAT → ON RECEIPT OF APPEAL WHILE TRYING A SUIT, IN RESPECT OF THE FOLLOWING
 MATTERS:
AFTER GIVING THE PARTIES TO OPPORTUNITY OF BEING HEARD  SUMMONING AND ENFORCING THE ATTENDANCE ROLE OF COMPANY
 OF ANY PERSON AND EXAMINING HIM ON OATH
PASS ORDER AS THINKS FIT  REQUIRING THE DISCOVERY AND PRODUCTION OF SECRETARY
CONFIRMING, MODIFYING OR SETTING ASIDE THE ORDER DOCUMENTS
 RIGHT TO LEGAL REPRESENTATION ON BEHALF
 RECEIVING EVIDENCE ON AFFIDAVITS
APPEAL TO SUPREME COURT OF PERSON AGGRIEVED BEFORE THE SECURITIES
 ISSUING COMMISSIONS FOR THE EXAMINATION
APPELLATE TRIBUNAL (SAT)
OF WITNESSES OR DOCUMENTS
❖ ANY PERSON AGGRIEVED BY DECISION OR ORDER OF  RECOGNISES AS A COMPLIANCE OFFICER BY SEBI
 REVIEWING ITS DECISIONS
SECURITIES APPELLATE TRIBUNAL AND AUTHORISES PRACTISING COMPANY
 DISMISSING AN APPLICATION FOR DEFAULT OR
 SECRETARIES TO ISSUE VARIOUS CERTIFICATES
DECIDING IT EX PARTE
FILE APPEAL TO SUPREME COURT REGARDING UNDER ITS REGULATIONS
QUESTION OF LAW  SETTING ASIDE ANY ORDER OF DISMISSAL OF
 PRACTISING COMPANY SECRETARIES ARE ALSO
 ANY APPLICATION FOR DEFAULT OR ANY ORDER BY
AUTHORISED TO CERTIFY COMPLIANCE OF
WITHIN 60 DAYS + 60 DAYS (EXTENSION IF SUFFICIENT CAUSE): - PASSED BY IT EX PARTE SHUBHAMM SUKHLECHA
CONDITIONS OF CORPORATE GOVERNANCE IN
 ANY OTHER MATTER WHICH MAY BE
FROM THE DATE OF COMMUNICATION OF THE DECISION OR
CASE OF LISTED COMPANIES (CA, CS, LLM)
PRESCRIBED
ORDER OF THE SECURITIES APPELLATE TRIBUNAL TO HIM ON ANY
QUESTION OF LAW ARISING OUT OF SUCH ORDER
 HAS BEEN GRANTED
DEFINITION MEANS
A COMPANY CERTIFICATE OF REGISTRATION
DEPOSITORY
CENTRAL DEPOSITORY SERVICES NATIONAL SECURITIES &
SECTION 2(e) FORMED REGISTERED
(INDIA) LIMITED (CDSL) DEPOSITORY LIMITED (NSDL) UNDER SECTION 12(1A)
OF OF
THE UNDER THE SEBI ACT, 1992
DEPOSITORIES THE COMPANIES
DEPOSITORY ACT, 1996 ACT, 2013
TWO DEPOSITORIES FUNCTIONING IN
INDIA

OBTAIN A
THE SECURITIES OF A DOES NOT HAVE ANY CERTIFICATE OF
AN ORGANIZATION SHAREHOLDER ARE SHARES IN THE VOTING RIGHTS OR
WHICH ACT ALIKE DEPOSITORY MODE COMMENCEMENT
HELD IN THE OTHER ECONOMIC OF BUSINESS
CENTRAL BANK ELECTRONIC FORM ARE FUNGIBLE RIGHTS FROM SEBI

ACT AS A
THROUGH THE DEPOSITORY
MEDIUM OF A
DEPOSITORY CEASE TO HAVE
PARTICIPANT DISTINCTIVE BENEFICIAL OWNER BENEFICIAL OWNER
NUMBERS ENJOY ALL THE SUBJECT TO ALL THE
RIGHTS AND BENEFITS LIABILITIES

DEPOSITORY SYSTEM INVESTOR HAS TO OPEN DEPOSITORY AND

AN ACCOUNT WITH THE DEPOSITORY
DEPOSITORY PARTICIPANT BOTH
THROUGH A DEPOSITORY ARE REGULATED BY FUNCTIONS OF DEPOSITORY
PARTICIPANT SEBI
SHAREHOLDERS SHARE
ARE REQUIRED TO CERTIFICATES
BE ENTERED IN THE BELONGING TO
RECORDS OF THE INVESTORS
ARE TO BE INITIAL PUBLIC
DEPOSITORY AS OFFERS (IPO’S),
BENEFICIAL DEMATERIALIZED
OWNERS CORPORATE
BENEFITS
INVESTORS’
NAMES IN THE
COMPANIES’
SETTLEMENT
REGISTER ARE ACCOUNT OPENING
REPLACED BY THE
NAME OF
DEPOSITORY
AS THE REGISTERED
OWNER OF THE REMATERIALISATION
SECURITIES
BY CREATION OF
ENCUMBRANCE
SHUBHAMM
DEMATERIALISATION
TRANSFER OF OWNERSHIP CHANGES IN THE SUKHLECHA
DEPOSITORY IS DONE AUTOMATICALLY ON THE BASIS (CA, CS, LLM)
OF
DELIVERY VS. PAYMENT
 BAD MODELS OF DEPOSITORY
FASTER
IMMEDIATE DISBURSEMENT OF DELIVERIES
TRANSFER AND NON-CASH CHANGE OF
REGISTRATION OF CORPORATE ADDRESS OF
SECURITIES BENEFITS LIKE DEMATERIALISATION IMMOBILISATION
INVESTOR,
RIGHTS, BONUS
TRANSMISSION,
ETC.
BENEFITS OF
DEPOSITORY PROBLEMS DEMATERIALISATION PHYSICAL
SYSTEM SYSTEM NO SHARE WITH THE
RELATED TO SELLING PHYSICAL ACTUAL
ONLY CERTIFICATES DEPOSITORY
SECURITIES ON ELECTRONIC SCRIP IN OWNER HAS
ARE KEPT IN THE RIGHT
REDUCTION IN BEHALF OF A RECORDS EXISTENCE VAULTS
COST
BROKERAGE BY MINOR EFFECTIVE MAINTAINED
MANY BROKERS ELIMINATION OF BY
DEPOSITORY TRANSACTIONS IN THESE
FOR TRADING IN
SIMPLE SECURITIES→BOOK ENTRY
DEMATERIALIZED ALL RISKS ASSOCIATED WITH FORM
SECURITIES PHYSICAL CERTIFICATES TO WITHDRAW HIS
PHYSICAL SECURITIES
ADOPTED
IN INDIA FOR SAFE
CUSTODY

ACHIEVED IN THE NAME OF DEPOSITORY

IMMOBILIZATION BY AS
JUMBO
OF FRESH ISSUE NOMINEE OF THE BENEFICIAL
ISSUING CERTIFICATE
OWNERS

PHYSICAL SHARE CERTIFICATES OF AN PROCESS FOR

INVESTOR ARE TAKEN BACK BY THE COMPANY DEMATERIALISATION
PROCESS AT THE REQUEST
OF THE INVESTOR

STEP 1) INVESTOR OPENS

EQUIVALENT NUMBER OF SECURITIES ACCOUNT WITH DEPOSITORY
CREDITED TO INVESTORS’ ACCOUNT
PARTICIPANT (DP) STEP 5) STEP 7)
IN ELECTRONIC FORM
STEP 2) FILLS DEPOSITORY CONFIRMS
DEMATERIALISATION OF SHARES IS OPTIONAL DEMATERIALISATION REQUEST INTIMATES DEMAT
 FORM (DRF) ISSUER REQUEST TO
AN INVESTOR CAN STILL HOLD SHARES IN FOR REGISTERED SHARES DEPOSITORY
PHYSICAL FORM

WHAT IF SHAREHOLDER HOLD SHARE IN PHYSICAL FORM? STEP 3) INVESTOR LODGES DRF
AND CERTIFICATES WITH DP

SALES PURCHASES POINTS TO REMEMBER

 ODD LOT SHARE  PUBLIC

PHYSICAL SHARES ARE TO BE SOLD IF INVESTOR PURCHASES SHARES CERTIFICATES CAN ISSUES/RIGHT
ALSO BE ISSUES SHARES BY
THROUGH A SEPARATE SESSION FROM THE STOCK EXCHANGE
DEMATERIALIZED ARE ISSUED ONLY SHUBHAMM SUKHLECHA
 
IN DEMAT FORM (CA, CS, LLM)
SOLD AT A BIG DISCOUNT TO THE WILL GET DELIVERY OF THE SHARES
MARKET PRICES IN DEMAT FORM
 AN INVESTOR NEEDS TO
PROCESS OF OPEN AN ACCOUNT WITH
0 CONVERTING SECURITIES DEPOSITORY PARTICIPANT
TO DEAL IN SHARES IN
HELD IN BACK IN ELECTRONIC FORM
AN EQUIVALENT PHYSICAL DEPOSITORY CAN BE DEPOSITORY PARTICIPANT IS
ELECTRONIC
CERTIFICATE COMPARED TO A BANK LIKE A BRANCH OF THAT BANK
FORM IN A
FORM
DEMAT ACCOUNT
DEPOSITORY PARTICIPANT (DP)
CHARACTERISTICS
POINT TO BE NOTED:
SECURITIES SENT FOR REMATERIALISATION CANNOT BE TRADED ON STOCK EXCHANGE STEP 6) CLIENT'S
FACILITATES
CLIENT CAN REMATERIALISE HIS DEMATERIALISED HOLDINGS AT ANY POINT OF TIME ACCOUNT WITH DP THE REPRESENTATIVE (AGENT) OF THE DEMATERIALISATION/ ACTS AS AN AGENT
DEBITED INVESTOR IN THE DEPOSITORY SYSTEM REMATERIALISATION OF DEPOSITORY

PROCESS FOR STEP 2) DEPOSITORY

PROVIDES THE LINK BETWEEN THE
REMATERIALISATION PARTICIPANT ENTERS COMPANY AND INVESTOR THROUGH CUSTOMER ACCOUNT
THE REQUEST IN ITS THE DEPOSITORY INTERFACE OF OPENING
STEP 1) CLIENT SUBMITS SYSTEM WHICH BLOCKS DEPOSITORY
REMATERIALISATION THE CLIENT'S HOLDINGS. MAINTAINS SECURITIES’ ACCOUNT
REQUEST FORM (RRF) TO STEP 5) ISSUER BALANCES SETTLES TRADES IN
TRANSMISSION
DEPOSITORY ELECTRONICALLY REQUESTS/ ELECTRONIC
PARTICIPANT CONFIRMS NOMINATION SEGMENT
INTIMATES THE STATUS OF HOLDING
DEMAT TO TO THE ACCOUNT HOLDER
DEPOSITORY
PLEDGE/ FUNCTIONS LIKE
FINANCIAL INSTITUTIONS LIKE BANKS, ENFORCEMENT OF SECURITIES BANK
CUSTODIANS, STOCK BROKERS ETC. CAN PLEDGE ETC.
BECOME DP  AS PER SEBI GUIDELINES
BY
SHUBHAMM SUKHLECHA
(CA, CS, LLM) CORPORATE ACTIONS DEPOSITORY AND CUSTODIAN

SIMILARITY
ISSUER (REGISTRAR) ELECTRONIC SUCH AS DIVIDEND, BONUS, RIGHT ISSUE ARE
CORPORATE COMPANY ISSUE SECURITIES BOTH DEPOSITORY AND CUSTODIAL SERVICES
CREDIT IN GIVEN IN DEPOSITORY MODE
DIRECTLY IN DEPOSITORY FORM ARE RESPONSIBLE FOR SAFE KEEPING OF
ENTITY STATE GOVERNMENT NEW ISSUES MEANS
SECURITIES
ORGANIZATIONS
CENTRAL DIFFERENCE
ISSUING SECURITIES GOVERNMENT
ORGANIZATIONS  INVESTOR OPENS
ACCOUNT WITH DP  REGISTRAR UPLOADS NON- DEPOSITORY CUSTODIAN
HELD BY CASH CASH
 SUBMITS APPLICATION LIST OF ALLOTTEES TO BENEFITS
DEPOSITORY IN BENEFITS
WITH OPTION TO HOLD DEPOSITORY
ELECTRONIC FORM
SECURITIES IN DEPOSITORY
GIVING DP-ID AND CLIENT-ID BONUS,
DIVIDENDS
DEMATERIALISATION RIGHTS ISSUE LEGALLY TRANSFER CANNOT LEGALLY
BENEFICIAL TRANSFER BENEFICIAL
CONFIRMATION OF BENEFICIARY PROCESS DIRECTLY
OWNERSHIP OWNERSHIP
HOLDINGS
FORWARDED TO CREDITED TO MAIN OBJECTIVE TO MAIN OBJECTIVE
THE INVESTORS THE BENEFICIAL MINIMIZE THE PAPER HOLD IN SAFEKEEPING
FUNCTION CORPORATE ACTION  DEPOSITORY CREDITS BY THE OWNER’S WORK INVOLVED ASSETS/SECURITIES
OF ISSUER RIGHTS , BONUS ETC. ALLOTTEE’S ACCOUNT  REFUNDS SENT BY COMPANY OR ACCOUNT
WITH DEPOSITORY REGISTRAR AS USUAL WITH THE
RECONCILIATION OF ITS REGISTRAR THROUGH
PARTICIPANT AND TRANSFER OWNERSHIP, TRADING
DEPOSITORY HOLDINGS DEPOSITORY
AGENT AND TRANSFER OF
SECURITIES
REMATERIALISATION
 THE THE DEPOSITORIES ACT, 1996 ELIGIBILITY CONDITION FOR DEPOSITORY SERVICES
DEPOSITORIES ONE OR MORE
ACT, 1996 FRAMED BYE- PARTICIPANTS TO
SECTION 9 FUNGIBILITY OF SECURITIES LAWS RENDER ADEQUATE
 DEPOSITORY SYSTEMS AND
SERVICES ON ITS SAFEGUARDS TO
ALL CERTIFICATES OF THE SAME SECURITY PRIOR APPROVAL BEHALF PREVENT
SHALL BECOME INTERCHANGEABLE OF SEBI OBTAIN MANIPULATION
BUSINESS REGISTERED
BYE-LAWS OF
RULES OF WITH SEBI
DEPOSITORY
DEPOSITORY COMPLIES WITH
AS A DEPOSITORY
LEGAL THAT INVESTOR LOSES THE RIGHT TO (UNDER SEBI ACT, DEPOSITORIES
FRAMEWORK ACT, 1996
OF OBTAIN THE EXACT CERTIFICATE NUMBER 1992) ANY COMPANY
DEPOSITORIES
OR
COMPANY OTHER
FORMED AND COMPLIES WITH
INSTITUTION
IT IS LIKE WITHDRAWING MONEY FROM THE REGISTERED SEBI (DEPOSITORIES
BANK WITHOUT BOTHERING ABOUT THE UNDER THE MUST AND PARTICIPANTS)
THE SEBI DISTINCTIVE NUMBERS OF THE CURRENCIES COMPANIES ACT, REGULATIONS,
(DEPOSITORIES 2013 1996
AND
OTHER LAWS
PARTICIPANTS) PENALTY PROVISION
REGULATIONS,
2018
WHICHEVER IS LESS
₹ 1 LAC/EACH DAY DURING WHICH SUCH FAILURE CONTINUES ₹ 1 CRORE
OR
₹ 1 CRORE
→ The Companies Act, 2013 FAILURE TO
→ The Indian Stamp Act, 1899
FAILURE TO
→ Securities and Exchange Board of India Act, 1992 CONTRAVENTION
→ Securities Contracts (Regulation) Act, 1956 FURNISH DELAY IN WHERE NO
REDRESS
→ Benami Transaction (Prohibition) Act, 1988 INFORMATION/ ENTER INTO RECONCILE COMPLY WITH DEMATERIALISATION SEPARATE
INVESTOR'S
→ Income Tax Act, 1961 RETURN ETC. AGREEMENT RECORD DIRECTIONS OR ISSUE OF PENALTY HAS
→ Bankers’ Books Evidence Act, 1891 GRIEVANCES ISSUED BY SEBI CERTIFICATE OF BEEN PROVIDE
SECURITIES

THE SEBI (DEPOSITORIES AND PARTICIPANTS) REGULATIONS, 2018

REGULATION 76 AUDIT REPORT OF THE ISSUER INTERNAL AUDIT  CHECKLIST CONCURRENT AUDIT OF DP ROLE OF COMPANY SECRETARY
– FREEZING OF ACCOUNT  APPOINT
– ACCOUNT OPENING
AUDITED PURPOSE • UPDATED STATUS – REPORTING TO BOS
– CLOSURE OF ACCOUNT PRACTICING COMPANY
  OF THE REGISTER – PLEDGE AND SECRETARTY RIGHT TO LEGAL INTERNAL AUDIT
– DEMATERIALISATION
PRACTISING RECONCILIATION OF MEMBERS HYPOTHECATION OR REPRESENTATIO OF DEPOSITORY
OF SECURITIES
COMPANY →TOTAL ISSUED • CONFIRM – INVOCATION OF PRACTICING CHARTERED N PARTICIPANTS
– REMATERIALISATION
SECRETARY CAPITAL SECURITIES PLEDGE/HYPOTHECATION ACCOUNTANT
OF SECURITIES
OR → LISTED CAPITAL DEMATERIALISED – MARKET TRADES
BY PLEDGEE MAY ENTRUST AUDIT TO INTERNAL
QUALIFIED →CAPITAL HELD BY AS PER REQUESTS – OFF MARKET TRADES
– LENDING AND AUDITOR
CHARTERED DEPOSITORIES IN WITHIN 21 DAYS BORROWING OF
– TRANSMISSION
ACCOUNTANT DEMATERIALISED FORM FROM THE DATE SECURITIES  VERFICATION WITH REGARD
– RETURNS TO CONCURRENT
→CHANGES IN SHARE OF RECEIPT – RECORDS TO BE RECONCILIATION
DEPOSITORY TO ACCOUNT OPENING AUDIT OF
CAPITAL DURING THE MAINTAINED BY DP OF SHARE
– GRIEVANCE DEPOSITORY
– DISCLOSURE AND CAPITAL AUDIT
QUARTER REDRESSAL • ALL THE DOCUMENTS PARTICIPANTS
→IN-PRINCIPLE PUBLICATION OF
MECHANISM
INFORMATION • KYC DOCUMENTS
APPROVAL OBTAINED – COLLATERAL
– SUPERVISION BY DP • ASCERTAINTED THAT
BY THE ISSUER FROM SECURITY
ALL THE STOCK – CODE OF ETHICS FOR DP DOCUMENT VERIFIED BY THE
– ASSIGNMENT OF BY
EXCHANGES – BRANCH OF DEPOSITORY OFFICIALS OF THE
BUSINESS
PARTICIPANTS PARTICIPANTS SHUBHAMM SUKHLECHA (CA, CS, LLM)
 Lesson 4 - An Overview of SEBI (Issue of Capital and Disclosure Requirements) Regulations,
2018

KEY POINTS OF BASIC UNDERSTANDING OF ICDR

For IPO For FPO: Public issue

Issue/offer of securities is made to Classified into Initial public offer

Net tangible assets of at least
rs. 3 crores in each of the
preceding 3 full years
Change of name-at least 50% public (IPO) and Further public offer (FPO)
of the revenue for the
preceding 1 full year is earned
by the company from the
activity suggested by the new
name

IPO/FPO
An unlisted company makes either a fresh issue of
When an already listed company makes either a
The company has a minimum securities or offers their existing securities for sale
fresh issue of securities to the public, it is called a
average operating profit of Alternative Eligibility Norms: or both for the first time to the public, it is called an
FPO.
IPO.
Rs. 15 crores, during the
preceding 3 years, with • If the issue is made
operating profit in each of the
through the book-
3 preceding years.
building process
• To allot, at least seventy Right issue (RI)
five percent of the net
offer to public, to Issue of shares to existing As on a particular date fixed by the
Net worth of at least rs. 1 qualified institutional shareholders issuer (i.e. record date).
crore- 3 preceding yrs
buyers
• Refund full subscription
money if it fails to make
the said minimum
Change of name-at least 50% allotment to qualified
Applicability of the SEBI (ICDR) Regulations, 2018 of the revenue for the institutional buyers.
Bonus issue
preceding 1 full year is earned
RIGHTS ISSUE IPO OTHER INSTITUTIONAL by the company from the Issue of securities to existing shareholders in proportion to their paid up
activity suggested by the new capital held as on a record date, without any consideration, it is called a
ISSUES PLACMENT name.
Rights issue of a IPO by a unlisted Bonus Issue Listing on Innovators bonus issue.
listed issuer, issuer by a listed Growth Platform
where the issuer
aggregate value of
specified
securities offered PRIVATE PLACEMENT
is 50 crore rupees
or more

Right issue of IDR IPO by an small Preferential Qualified Institutions

and medium issue by a Placement by a listed
enterprise listed issuer issuer Preferential allotment Qualified institutions placement Institutional placement
programme
IPO of Indian
Depository
Receipts

FPO by a listed
issuer
 DOCUMENTS
DRAFT OFFER DOCUMENT
Document in draft
stage are filed with
SEBI may specifies
SEBI, at least 30 days
changes/ its
prior to the filing of
observations, if any.
the Offer Document
with ROC/SEs.
OFFER DOCUMENT
It is filed with
Prospectus in case
Registrar of
of a public issue and
Companies (ROC)
Letter of Offer in
and Stock
case of a right issue.
Exchanges.
A RHP can be filed with
the ROC and notify the
floor price or a price
band by way of an
advertisement one day
prior to the opening of
the issue.
Disclosure of upper and Book building is price
lower price bands. discovery process.
It does not have details Red
of either price or
number of shares being
Herring
offered, or the amount Prospectus
of issue.
(RHP)
Composite issue
Issuer or the Lead
Merchant banker shall
carry out such
changes in the draft
offer document.
Covers all the
relevant
information to help
an investor make an
decision.
Issuer mentions a price in the
prospectus fixed price issue,.
Only on completion of
the bidding process, the
details of the final price
are included in the offer
document.
DIFFERENTIAL PRICING
Book building issue-No discount to Anchor investor.
There can be
difference in price
offered in public
For alternate method of book building, the issuer can offer OFFER PRICE- lower than floor price and the
issue and rights difference between such price and floor price shall
specified securities to its employees at a lower price.
not be more than 10%.
issue .
For retail individual investors(RII) or retail individual
shareholders(RIS) or employees
Justification for
such price OFFER PRICE-lower than the price
Application value- not at which net offer is made to other
difference should more than two lakh
be given in the categories of applicants.
rupees
offer document. Difference shall not be more than
10%
PRICE AND PRICE BAND
Mention floor price or price The price can be determined
band in the red herring at a later date before
prospectus in case of a book registering with Registrar of
built issue Companies.
The issuer should announce the floor
The cap on the price band price or price band, FOR IPO- at least 2
shall be less than or equal to
120% of the floor price.
working days before the opening of the
bid and for FPO-at least 1 working day
before the opening of the bid.
 PROMOTERS CONTRIBUTION

PROMOTERS MINIMUM CONTRIBUTION EXEMPTION FROM MINIMUM LOCK IN PERIOD FOR PROMOTER CONTRIBUTION Securities ineligible for Minimum Promoter
CONTRIBUTION requirement
Unlisted Public issue Not less than 20% of the
Exemptionpromoter
No identifiable from CONDITIONS LOCK-IN PERIOD
company post-issue capital Securities acquired during preceding 3 years for
requirement of Promoters contribution and contribution 3 years consideration other than cash or involving Revaluation of
Where the equity shares are
promoters’ made by alternative investment fund
Listed Public issue To the extent of 20% of the frequently tradedContribution:
for 3 years, and: assets or involving capitalisation of intangible assets.
company proposed issue or 20% of • the issuer has redressed at least
Securities acquired in preceding 1 year at a price lower than
the post-issue capital 95%Exemption
of the investorfrom
complaints Any contribution made by promoters over 1 year
the issue price.
received till the endofof the quarter
requirement and above the minimum contribution
Listed Composite 20% of the proposed public immediately
promoters’ preceding the month
Contribution:
company issue issue or 20% of the post- of reference date, and Pledged security.
issue capital • the issuer has been in compliance
Exemption from
with the SEBI (LODR) Regulations,
2015requirement
for a minimumofperiod of 3
promoters’ Contribution:
years.
Right issue
Exemption from
requirement of
promoters’ Contribution:

ISSUE OPENING DATE PERIOD OF SUBSCRIPTION MINIMUM NUMBER OF SHARE APPLICATIONS AND APPLICATION MONEY

1) AFTER 3 days from the

Public issue Revision of price band Force majeure
registration of Red Herring
• Open for minimum 3 • Period disclosed in the • Issuer may extend the Minimum application-
prospectus or Prospectus with Range Rs.10,000 to Rs.
working days RHP can be extended bidding period
ROC. for minimum 3 working 15,000, to be decided in
• And maximum10 consultation with Minimum sum payable on
working days days application shall be at least
merchant banker.
2) Within 12 months from the • Total bidding period 25% of the issue price.
date of SEBI’s observation letter. should not exceed 10
working days.

ISSUE OF ADVERTISEMENTS

Pre-Issue Post-Issue MINIMUM SUBSCRIPTION

• On receipt of final observation letter by SEBI.
• Issuer shall give an advertisement in
✓ English National daily
✓ one Hindi National newspaper
✓ regional language newspaper with
wide circulation at the place where
the registered office of the issuer is
situated.
• Merchant banker will ensure the release an advertisement within 10 days ❖ Shall not be less than ninety percent of the offer through
from the date of completion of the various activities like- offer document.
✓ in all issues, advertisement giving details relating to ❖ In the event of non-receipt of minimum subscription-
oversubscription, basis of allotment, number, value and refund application money in 15 days of closure of issue.
percentage of applications,etc.
✓ In an English National daily ,one Hindi National newspaper, regional
language newspaper with wide circulation at the place where the
registered office of the issuer is situated.
•
✓
 Appointment of Approval of board of Making application Printing and
Holding of general managers to the Drafting of Intimation to Stock directors to to Stock Exchange(s) distribution of
Compliance with SEBI Pricing
meeting issue and other prospectus Exchange. prospectus and other for permission to prospectus and
agencies. documents listing application forms

Promoters Certificate relating to Coordination with

Mandatory Collection Minimum
contribution and Underwriting promoters’ the bankers to the Allotment of shares Refund orders.
Centres subscription
lock-in-period contribution issue

Conditions for making IPO Conditions for FPO Monitoring Agency

CONDITIONS IN ADDITION TO CONDITIONS 1,2,3,4 FOR IPO.
1) If the issue size, inclusive of OFS, exceeds 100 Crores.

2) The issuer shall-

•Issuer will make an application to one or
more stock exchanges to seek an in-
1) In-principle principle approval for listing of its
approval of SE specified securities.
•Choose of the SE as designated SE.
5) Amount •as mentioned in objects of the issue in
the draft offer document and the offer
for General document • Ensure that uses of proceeds are monitored by public financial
Corporate institutions.
•not exceed twenty five per cent of the
Purposes amount being raised by the issuer. • Or by one of the scheduled commercial banks named in the
offer document as a banker to the issuer.

3) Monitoring agency shall submit a quarterly report to the issuer.

4) Report to be submitted till utilization of 95% of amount of general

•Enter into an agreement with a Entities not eligible to make an initial public offer corporate purpose.
depository for dematerialisation
2)
•Of the specified securities already
Dematerialisation
issued and proposed to be issued
agreement If the issuer, any of its promoters,
•All securities held by the promoters are promoter group, selling shareholders
in dematerialised form. are debarred from accessing the Manner of Calls
capital market by SEBI.

When the subscription money is

If any promoters or directors of the outstanding
3) Conditon as to •Either be fully paid-up issuer is a promoter or a director of any
partly paid up share •Or forfeited other company which is debarred from
accessing the capital market by SEBI.

Issuer shall ensure that the If any applicant fails to pay the
outstanding subscription call money within the said
•Firm arrangements of 75% of finance If the issuer or any of its promoters or
through verifiable means towards directors is a willful defaulter or money is called within twelve months, his equity
specific project proposed to be funded fugitive offender. twelve months from the shares shall be forfeited along
4) Finance from the issue proceeds. date of allotment. with subscription money.
arrangements •Excluding the amount to be raised
through the proposed public issue or
through existing identifiable internal If there are any outstanding convertible
accruals securities or any other right which If a monitoring agency is appointed, the issuer shall not be
would entitle any person with any
option to receive equity shares of the required to call the outstanding subscription money within
issuer. twelve months.
 FILING OF OFFER DOCUMENT

1) File the draft offer document

1) Issuer and the lead merchant banker shall carry out changes specified by SEBI
with the stock exchange(s)
SEBI may specify changes or issue observations, on the draft offer document filed with it and comply with the observations issued by SEBI before registering the
within a period of 30 days of receipt of prospectus, the red-herring prospectus or the shelf prospectus as the case may
2) Submit the necessary
1) The draft offer document be with the Registrar of Companies.
documents like PAN, bank
2) Satisfactory clarification/information from the lead merchant bankers and/or regulatory 2) After making the changes, an updated offer document or a fresh draft offer
account details, details of
authorities. document shall be filed with SEBI
concerned ROC ,etc.
3) A copy of in-principle approval letter issued by the recognized stock exchanges.

Allotment Procedure and Basis of Allotment Equity shares listed on stock exchange for a period of at least EXIT OPPORTUNITY TO DISSENTING SHAREHOLDERS
three years immediately preceding the reference date
1) NO ALLOTMENT

I. If the number of prospective allottees is less than one Entire shareholding of the promoter group is held in
thousand. dematerialised form
Conditions for Exit Offer
II. In excess of the specified securities offered through
the offer document except in case of Average market capitalisation of public shareholding of the 1. The public issue has opened after April 1, 2014.
oversubscription. issuer is at least one thousand crore rupees -public issue and 2. The proposal for change in objects or variation in terms of a contract is
two hundred and fifty crore rupees -rights issue.
dissented by atleast 10% of the shareholders.
2) BASIS OF ALLOTMENT 3. Amount to be utilized for the objects for which the offer document was issued
Annualised trading turnover of the equity shares of the issuer
I. Allotment of specified securities to applicants shall be during six calendar months immediately preceding the month is less than 75 % of the amount raised
on a proportionate basis within the respective of the reference date has been at least 2% of the weighted
average number of equity shares listed during such six
investor categories.
months’ period.
II. The allotment of specified securities to each retail
individual investor shall not be less than the Exit Offer Price
Annualized delivery-based trading turnover of the equity
minimum bid lot.
shares during six calendar months immediately preceding the
III. Minimum allotment should be equal to the minimum month of the reference date has been at least ten % of the
annualised trading turnover of the equity shares during such ‘Exit price’ shall be the highest of the following:
application size.
six months‘ period.
IV. Value of specified securities allotted to any person in a) The volume-weighted average price paid or payable for acquisitions, whether by the
pursuance of reservation shall not exceed - promoters or shareholders having control or by any person acting in concert with them,
2lakh rupees- retail investors or Comply with the equity listing agreement or SEBI listing during the fifty-two weeks immediately preceding the relevant date;
5 lakh rupees- eligible employees. regulations, 2015 for preceding 3 years.
b) The highest price paid or payable for any acquisition, whether by the promoters or
Issuer has redressed at least ninety five per cent of investors shareholders having control or by any person acting in concert with them, during the
grievances. twenty-six weeks immediately preceding the relevant date;
FAST TRACK FPO
No show-cause notices issued, prosecution proceedings initiated c) The volume-weighted average market price of such shares for a period of sixty
No need to file the draft offer document with SEBI or pending by SEBI.
trading days immediately preceding the relevant date as traded on the recognised stock
and obtain observations from SEBI. No settlemet of violation of any securities laws with SEBI in the exchange where the maximum volume of trading in the shares of the issuer are
preceding 3 years. recorded during such period, provided such shares are frequently traded;
No need to make a security Deposit with the
Stock Exchanges d) Where the shares are not frequently traded, the price determined by the promoters
Equity shares have not been suspended from trading as a
disciplinary measure in preceding 3 years. or shareholders having control and the merchant banker taking into account valuation
parameters including book value, comparable trading multiples, and such other
IF THE FOLLOWING CONDITONS ARE FULFILLED There shall be no conflict of interest between the lead merchant
parameters as are customary for valuation of shares of such issuers.
banker(s) and the issuer
 Manner of providing exit opportunity

Special resolution
•Pass the special •submit list of •intimate the
resolution dissenting recognised stock
shareholders, as a security of
•submit voting exchange
certified by performance The tendering the shares shall be
results to RSE. •recognised stock create an escrow period shall start tendered and Consideration shall submit in 2
compliance dissenting
exchange(s) shall account and not later than shareholders shall settled through the be paid to working days all
officer.
on receipt of such deposit the seven working have the option to recognised stock dissenting details of the exit
•appoint a intimation
merchant aggregate days from the withdraw such exchange shareholders offer and
disseminate the consideration in passing of the acceptance till the mechanism as within ten working shareholders
banker same to public
registered with the account at special resolution date of closure of specified by SEBI days from the last who have
within one least two working and shall remain the tendering for the purpose of date of the accepted the
SEBI and working day.
finalize the exit days prior to open for ten period. takeover, buy-back tendering period same.
offer price opening of the working days. and delisting.
tendering period.
SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015
ONE TIME
COMPLIANCE COMPLIANCES
SEBI ON REQUIREMENT
NOTIFIED SEPTEMBER 2, 2015
EVENT BASED QUARTERLY
CAME INTO W.E.F COMPLIANCES LISTED ENTITY COMPLIANCES
SHALL COMPLY
FORCE DECEMBER 1, 2015
ALIGN CLAUSES OF THE LISTING CONSOLIDATE THE CONDITIONS UNDER COMPLIANCES
UNDER THE
AGREEMENT WITH COMPANIES ACT, 2013 DIFFERENT SECURITIES LISTING AGREEMENTS LISTING
IN ONE SINGLE REGULATION REGULATIONS

BY YEARLY HALF YEARLY

SHUBHAMM SUKHLECHA (CA, CS, LLM) COMPLIANCES COMPLIANCES
ONE TIME COMPANY
COMPLIANCE SECRETARY AS THE QUARTERLY COMPLIANCE
COMPLIANCE
OFFICER
FROM END OF FROM END OF
APPOINT
EACH QUARTER EACH QUARTER

SHARE TRANSFER
AGENT
SUBMIT A QUARTERLY SHALL FILE WITH THE SUBMIT STATEMENT SUBMIT QUARTERLY
COMPLIANCE REPORT RECOGNIZED STOCK SHOWING HOLDING OF AND YEAR-TO-DATE
ON CORPORATE EXCHANGE SECURITIES AND FINANCIAL RESULTS TO
GOVERNANCE A STATEMENT GIVING SHAREHOLDING PATTERN THE STOCK EXCHANGE
TO THE STOCK
AUDIT COMMITTEE NUMBER OF INVESTOR EXCHANGE(S)
LISTED COMPLAINTS
ENTITY
NOMINATION AND PENDING AT THE RECEIVED DISPOSED REMAINING
REMUNERATION BEGINNING OF DURING THE OF DURING THE UNRESOLVED AT THE
COMMITTEE THE QUARTER QUARTER QUARTER END OF THE QUARTER

HALF YEARLY
CONSTITUTION STAKEHOLDERS
RELATIONSHIP
COMPLIANCE
OF COMMITTEES COMMITTEE

RISK MANAGEMENT
COMMITTEE The listed entity shall submit to the stock
exchange, disclosures of related party on The listed entity shall also submit as part of
consolidated basis. its standalone or consolidated financial
results for the half year a statement of
within 30 days from date of publication of its assets and liabilities and a statement of cash
VIGIL MECHANISM financial results for the half year flows by way of a note
 YEARLY COMPLIANCE EVENT BASED COMPLIANCES
FROM THE
END OF
THE INTIMATE THE PRIOR INTIMATIONS OF
FINANCIAL APPOINTMENT OF SHARE
WITHIN
BOARD MEETING TO
≤ 5 CLEAR
YEAR TRANSFER AGENT TO 7 DAYS OF STOCK EXCHANGE FOR DAYS IN
THE STOCK EXCHANGE(S) AGREEMENT FINANCIAL RESULTS ADVANCE

PAY SUBMIT SUBMIT INTIMATE THE RECORD

   DATE OR DATE OF WITHIN OBTAIN IN-PRINCIPLE
APPROVAL FROM
PRIOR TO
TO THE RECOGNISED ANNUAL AUDITED ANNUAL REPORT CLOSURE OF TRANSFER 7 DAYS OF ISSUANCE
TO BOOKS TO THE STOCK RECOGNISED STOCK
STOCK EXCHANGE STANDALONE AGREEMENT OF SECURITY
EXCHANGE(S) EXCHANGE
FINANCIAL THE STOCK EXCHANGE
OR RESULTS OF IT BEING
+ SUBMIT DETAILS
FEES CHARGES APPROVED ADOPTED
AUDIT REPORT DISCLOSURE OF PRICE REGARDING VOTING
0 SENSITIVE INFORMATION
IN THE ANNUAL TO THE STOCK ≤ 24 HOURS RESULTS BY ≤ 48 HOURS
AS APPLICABLE0 SHAREHOLDERS TO THE
GENERAL MEETING EXCHANGE(S) STOCK EXCHANGE(S)

CORPORATE GOVERNANCE FILE DRAFT SCHEME OF PRIOR

ARRANGEMENT TO THE APPROVAL
STOCK EXCHANGE(S) BEFORE FILING
EVIDENT FROM THE WITH COURT
HIGH ON LOOKED UPON CONTINUOUS UPDATION OF
THE AS A DISTINCTIVE →GUIDELINES
AGENDA BRAND AND BENCHMARK →RULES
OF SEBI IN THE PROFILE OF →REGULATIONS
BY SEBI FOR ENSURING LISTED ENTITY ISSUE CERTIFICATE
CORPORATE EXCELLENCE BY
TRANSPARENCY AND  REGARDING
ACCOUNTABILITY SHUBHAMM APPOINT A QUALIFIED TRANSFER OF SECURITIES
COMPANY SECRETARY AS THE
SUKHLECHA COMPLIANCE OFFICER WITHIN THE STIPULATED TIME
CONSTITUTION
REGULATION
CONSTITUTION REGULATION OF NOMINATION (CA, CS, LLM) ROLE OF
18 OF AUDIT
19 &
COMPANY
COMMITTEE REMUNERATION
COMMITTEE SECRETARY
AS PER SEBI LISTING
IN CASE OF RECLASSIFICATION
REGULATIONS
OF SHARES ISSUE
ISSUE CERTIFICATE REGARDING
CERTIFICATE OF PRE AND POST
CONSTITUTION COMPLIANCE OF CONDITIONS
REGULATION REGULATION CONSTITUTION SHAREHOLDING PATTERN
OF OF CORPORATE GOVERNANCE
OF RISK
STAKEHOLDERS
20 RELATIONSHIP 21 MANAGEMENT
COMMITTEE
COMMITTEE

REGULATION
VIGIL
22 MECHANISM
 SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011
Systematic framework for acquisition of stake
in listed companies so that the interests of the
shareholders of listed companies are not
compromised in case of an acquisition or
takeover.
“Acquirer” means any person who, directly or indirectly,
acquires or agrees to acquire whether by himself, or
through, or with persons acting in concert with him,
shares or voting rights in, or control over a target
company.
“Frequently traded shares” means shares of a target company,
in which the traded turnover on any stock exchange during the
twelve calendar months preceding the calendar month in which
the public announcement is made, is at least ten percent of the
total number of shares of such class of the target company.
However, where the share capital of a particular class of shares
of the target company is not identical throughout such period,
the weighted average number of total shares of such class of
the target company shall represent the total number of shares.
“Target Company “means a company and includes a
body corporate or corporation established under a
Central legislation, State legislation or Provincial
legislation for the time being in force, whose shares are
listed on a stock exchange.
What is the basis of computation of the creeping acquisitions limit under
Takeover Regulations 2011?
For computing acquisitions limits for creeping acquisition specified under regulation
3(2), gross acquisitions/ purchases shall be taken in to account thereby ignoring any
intermittent fall in shareholding or voting rights whether owing to disposal of shares
or dilution of voting rights on account of fresh issue of shares by the target company.
These regulations apply to direct and indirect acquisition of shares or voting rights, in or control over Target
Company
NOT apply to direct and indirect acquisition over a company listed without making a public issue in the
Institutional trading platform of a recognized stock exchange.
OPEN OFFER
MANDATORY OPEN OFFER
TRIGGER POINT FOR MAKING AN
OPEN OFFER BY AN ACQUIRER
An acquirer, along with Persons acting
in concert( PAC) , if any, who intends
to acquire shares
which along with his existing
shareholding would entitle him to
exercise 25% or more voting rights,
can acquire such additional shares
only after making a Public
Announcement (PA) to acquire
minimum twenty six percent shares of
the Target Company from the
shareholders through an Open Offer.
CREEPING ACQUSITION- A person
already holds 25% or more shares in
target company, intends to acquire
more than 5 % shares in the target
company, also has to give an open
offer.
ESCROW PROVISION
Opened by- the acquirer when- Not later than two working days prior to the date of the detailed public
statement.
Consideration payable under the Open Offer
On the first five hundred crore rupees
On the balance consideration
VOLUNTARY OPEN OFFER
Offer given voluntarily without triggering the
mandatory Open Offer.
Eligibility-Prior holding of at least 25% shares- To be
eligible for making a Voluntary Open Offer, the
regulations mandates the prior holding of at least 25%
stake in the Target Company by the Acquirer along with
the PACs.
Prohibition on the acquisition of shares during the
Offer Period - SEBI Takeover Regulations, 2011
prohibits the acquirer who has made a Voluntary Open
Offer from further acquiring the shares during the
Offer Period otherwise than under the Open Offer
Restriction of the acquisition of shares post
completion of Voluntary Open Offer - No acquisition a
period of 6 months after completion of the Open Offer
except pursuant:
(a) To another Voluntary Open Offer.
(b) To Competing Open Offer to the Open Offer made
by any other person for acquiring shares of the Target
Company.
Offer size- the acquisition of at least ten per cent (10%)
of the voting rights in the Target Company. It Shall not
exceed maximum permissible non-public shareholding
applicable to such Target Company.
Escrow amount
An amount equal to twenty-five per cent of
the consideration
An additional amount equal to ten per cent
of the balance consideration
OTHER CONCEPTS
CONDITIONAL OFFER
1) The minimum level of acceptance
is stipulated.
2) Minimum level of acceptance=
minimum number of shares desired
by the acquirer.
3) If minimum level of acceptance is
not reached, the acquirer will not
acquire any shares under open
offer/share purchase agreement.
OFFER PRICE
Price = acquirer announces to acquire
shares from public shareholders.
This price should not be less than-
For frequently traded shares
Open offer price shall be highest of
the following:
i) Highest negotiated price per share
under the share purchase agreement
(“SPA”) triggering the offer
ii) Volume weighted average price of
shares acquired by the acquirer
during 52 weeks preceding the public
announcement (“PA”)
iii) Highest price paid for any
acquisition by the acquirer during 26
weeks immediately preceding the PA
iv) Volume weighted average market
price for sixty trading days preceding
the PA.
For shares NOT traded frequently-
(i)- (iii) Same as above i.e. for
frequently traded share price.
(iv) The price determined by the
acquirer and the manager to the open
offer after taking into account
valuation parameters including book
value, comparable trading multiples,
and such other parameters that are
customary for valuation of shares of
such companies.
 Publication of Public Announcement and Detailed Public
EVENT BASED DISCLOSURE
Statement

PARTICULARS TIME-LIMIT TO WHOM

PUBLIC On the same day All the stock exchanges on which the shares of Regulation Made Trigger Time Period Made to
ANNOUNCEMENT the target company are listed. The stock 29(1) Acquirer Acquirer + Persons acting in concert 2 working days of the SE where the
exchanges shall forthwith disseminate such (PAC) acquiring 5% or more shares of the receipt of intimation of shares are listed
information to the public. target company allotment of shares, or the and the target
acquisition of company
PUBLIC Within one working The acquirer shall sent copy of Public shares or voting rights
ANNOUNCMENT day from the date of announcement to SEBI and to the target 29(2) Acquirer The number of shares or voting rights held and 2 working days of the receipt of SE where the shares are
public announcement company at its registered office. change in shareholding or voting rights, even if such intimation of allotment of shares, listed and the target
change results in shareholding falling below five or the acquisition of company
DETAILED PUBLIC Within five working Publication in the following newspaper: percent and such change exceed 2% of total shares or voting rights
ANNOUNCMENT day from the date of # One Hindi national language daily shareholding or voting rights in the target company
public announcement # One English national language daily by the Acquirer + PAC holding 5% or more shares, of
# One regional national language daily the target company or voting rights.
# One regional language daily with wide
circulation at the place of the stock exchange CONTINUAL DISCLOSURES
where the maximum volume of trading in the 30(1) Any Person + PAC holding more than 25% shares or Within 7 working days from the SE where the shares are
shares of the target company is recorded voting rights in the target to disclose their aggregate financial year ending 31st March listed and target
during the sixty trading days preceding the date shareholding and voting rights every year company
of the public announcement. DISCLOSURES OF PLEDGED/ENCUMBERED SHARES
31(1) Promoter Promoter + PAC pledging or creating encumbrance Within 7 working days from the Stock exchange where
DETAILED PUBLIC A copy of Detailed Public Statement shall be on the shares of the target company creation, invocation or release of the shares are listed
ANNOUNCMENT sent to followings: pledge and target company
# SEBI; 31(2) Acquirer Invocation or release of the pledge or encumbrance Within 7 working days from the Stock exchange where
# All the stock exchanges in which the shares of on the shares of the target company creation, invocation or release of the shares are listed
the target company are listed; and pledge and target company
# The target company at its registered office.

PROCEDURE UNDER TAKEOVER CODE

•Submitted in 5 days of detailed public announcment.

•Submit to - a) SEBI b) Target Company at its registered office c)Stock Exchanges where the shares of
DRAFT LETTER OF the Company are listed.
OFFER

•to the shareholders whose names appear on the register of members of the Target Company as of
the identified date.
DISPATCH OF
LETTER OF OFFER

•shall remain open for 10 working days

OPENING OF
LETTER OF OFFER

•Within 10 working days from the last date of the tendering period, the acquirer shall complete all
requirements as prescribed under these regulations and other applicable law relating to the Open
COMPLETION OF Offer including payment of consideration to the shareholders who have accepted the open offer.
REQUIREMENTS
 SEBI (BUY BACK OF SECURITIES) REGULATIONS,2018

Companies use various tools to restructure their business which affect the share price. The shares are held by OBJECTIVES for BB-
various segments of the society, so it is important that there should be equal treatment and opportunity, REGULATION APPLICABLE TO BB- SEBI (Buy-back of
protection of small shareholders, proper disclosure and transparency. Buy-back of securities is a corporate Securities) Regulations, 1998 as amended from (i) To improve earnings per share;
financial strategy which involves repurchase of its outstanding shares by a company. time to time. (ii) To improve return on capital, return on net worth and to enhance the
long-term shareholder value;
(iii)To provide an additional exit route to shareholders when shares are
undervalued or are thinly traded;
BUY BACK UNDER COMPANIES ACT, 2013 (iv)To enhance consolidation of stake in the company;
(v)To prevent unwelcome takeover bids;
(vi)To return surplus cash to shareholders;
(vii)To achieve optimum capital structure.

COMPANY BUY BACK NOT MORE THAN 10% of the EFFECTS of BB-
paid up capital and free
Resolution by board 2 days reserves. (i) Reduction in outstanding number of equity shares,
File with SEBI/ stock (ii) Improvement in earnings per equity share
of directors
exchange(s) (iii)Enhance return on net worth
(iv) Create long term value for continuing shareholders

MORE THAN 10% , UPTO 1) NO BB- more than 15% from open market.
COMPANY BUY BACK MAXIMUM 25% of the paid 2) NO BB by spot transaction/negotiated deals/private arrangement.
7 Days up capital and free reserves. 3) NO BB within 1 year from closure of preceding BB.
Special resolution
File with SEBI/ stock
exchange(s) Buy–back of physical shares or other specified securities
A company shall buy-back its shares or other specified securities in physical form through
Contents of explanatory statement (a) a full and complete disclosure of all material facts; open market method as provided hereunder:
SEND Notice +
(b) the necessity for the buy-back; (a) a separate window shall be created by the stock exchange, which shall remain open
explanatory
(c) the class of shares or securities intended to be purchased under the buy-back; during the buyback period, for buy-back of shares or other specified securities in physical
statement
(d) the amount to be invested under the buy-back; and form.
(e) the time-limit for completion of buy-back. (b) the company shall buy-back shares or other specified securities from eligible
shareholders holding physical shares through the separate windows, only after
verification of the identity proof and address proof by the broker.

Methods of buy-back BB- THROUGH STOCK EXCHANGES • company shall upload the information regarding the shares or other specified
securities bought back on its website on a daily basis.
SR/BR- specify the maximum
Company Stock • buy-back offer shall open not later than seven working days from the date of
price at which BB will be made. public announcement and shall close within six months from the date of
exchange
opening of the offer
From the • The buy-back should be made only on stock exchanges having Nationwide
existing or From From the open
SEBI Submit information Trading Terminal facility and only through the order matching mechanism.
security odd-lot market • The Company shall, before opening of the offer, create an escrow account. An
2 DAYS regarding the shares
holders on a holders amount equal to 25 % of the total proposed buy back has to be deposited in
BB- NOT be or other securities
proportionate Copy of public bought back, to the escrow account.
not be from Appoint a
basis announcement. stock exchange on a • The escrow amount may be released for making payment to the shareholders
the merchant banker,
daily basis in the form subject to atleast 2.5% of the total amount for buy-back remaining in the
(BB through promoters AND escrow account at all points of time.
tender offer) or persons specified by SEBI and
Through Through Make a public • The company shall extinguish and physically destroy the security certificates so
in control of the stock exchange
book stock bought back during the month in the presence of a Merchant Banker and the
the announcement shall upload the same
building exchange Statutory Auditor, on or before the fifteenth day of the succeeding month.
company on its official website
process • the company shall ensure that all the securities bought-back are extinguished
immediately. within seven days of the last date of completion of buyback.
 a) The offer for buy-back should be kept open for a period of not less than
fifteen days and not exceeding thirty days.
BB- THROUGH BOOK-BUILDING File copy
b)The merchant banker and the company should determine the buy-back price
based on the acceptances received and the final buy-back price, which should
The resolution COMPANY be the highest price accepted should be paid to all holders whose securities
should specify have been accepted for the buy-back.
the maximum Deposit in the escrow
price at which APPOINT MERCHANT account should be 2 DAYS Book-building process should be made through an c) The company shall extinguish and physically destroy the security certificates
the buy-back BANKER made before the electronically linked transparent facility. The number so bought back during the month in the presence of a Merchant Banker and the
will be made. date of the public of bidding centres should not be less than thirty and Statutory Auditor, on or before the fifteenth day of the succeeding month.
announcement. there should be at least one electronically linked
computer terminal at all the bidding centres. d) The company shall ensure that all the securities bought-back are extinguished
within seven days of the last date of completion of buyback.

BUY-BACK FROM EXISTING SECURITY-HOLDERS THROUGH TENDER OFFER

COMPANY PUBLIC One English National SEBI may give its comments on the draft letter in Merchant banker
ANNOUNCMENT 5 days seven working days of the receipt of the draft
Daily, one Hindi shall carry out
DRAFT LETTER letter of offer.
National Daily and a Filed changes specified
OF OFFER
Authorized by a Regional language daily with by SEBI before
SEBI has sought clarifications or additional
special resolution or all with wide circulation + Declaration SEBI dispatching letter
information from the merchant banker, the
a resolution passed at the place where the of solvency of offer to
SEBI MERCHANT period of issuance of comments shall be
by the Board of Registered office of the shareholders.
BANKER extended to the seventh working day from the
Directors company is situated date of receipt of satisfactory reply

Company shall
The shares proposed to be bought back shall be The offer for buy
announce a record
divided into two categories; back shall remain Dispatch of letter of date for determining
(a) reserved category for small shareholders open for a period
and offer and tender form IN 5 days from SEBI’s the entitlement and
of ten working Date of the
(b) the general category for other shareholders IN 5 DAYS to eligible communication the names of the
days. opening of the
shareholders. eligible security
offer
holders for the BB

Company shall verify offers received

The company should as and by way of security
for performance of its obligations under the
Regulations, on or before the opening of the
offer, deposit in an escrow account the sum as
specified:
i) consideration payable does not exceed Rs 100
crores – 25 % of the consideration payable;
ii) if the consideration payable exceeds Rs 100
crores – 25 % upto Rs 100 crores and 10%
thereafter;
The company shall immediately after and make payment of consideration
the date of closure of the offer, open a to those security holders whose
special account with a SEBI registered offer has been accepted
banker to an issue and deposit therein,
The security certificates shall be
On payment of consideration to all the security- such sum as would, together with the
extinguished and physically
holders who have accepted the offer and after amount lying in the escrow account
destroyed in the presence of a
completion of all the formalities of buy-back, the make up the entire sum due and
Registrar to issue or the Merchant
amount, guarantee and securities in the escrow, if payable as consideration for the buy-
Banker and the Statutory Auditor
any, should be released to the company. back and for this purpose, may transfer
within fifteen days of the date of
the funds from the escrow account.
acceptance of the shares.

ODD-LOT BUY-BACK- The provisions pertaining to buy-back through tender offer as specified in this Lesson shall be applicable mutatis mutandis to buy-back of odd-lot shares or other specified securities
 Lesson 8 SEBI (Delisting of Equity Shares) Regulations, 2021

AGENCIES INVOLVED IN DELISTING PROCESS AND THEIR ROLE COMPULSORY DELISTING

Delisting- Removal of the listing of the securities of a
listed company from the Stock Exchange. What- permanent removal of securities of a listed company from a stock
Merchant banker
exchange
•Determine exit price. Why- a penalizing measure at the behest of the stock exchange for non-
•Makes public announcements. compliance with listing agreement within the time frames prescribed.
•Determines biding centres.
TYPES OF DELISTING •Appoints trading members.
•Determines and announces final trading price.
Two directors of
•Overseas settlement process.
the recognized
stock exchange

Professionals involved Executive

Voluntary Compulsory Director or
delisting delisting •Intimates stock exchange Secretary of Constitution One
•Determines exit price. the of Panel of representative
A listed company Stock Exchange itself recognized Stock of the
•Finalizes schedule of delisting. exchange investors
seeks delisting of delists the securities of •Overseas book building process. stock
exchange
securities of its own such Company •Opens escrow account.
volition •Overseas settlement process. One
representative of
the MCA and ROC

Circumstances where delisting is not permissible

Public notice before delisting Time period of
order making
1) In one English national daily representation
No promoter shall directly or indirectly 2) One regional language not less than
employ the funds of the company to finance
an exit opportunity or an acquisition of Newspaper of the region fifteen working
shares. where the concerned days from the
No acquirer recognized stock exchange notice
If entity
Delisting of securities Suspension of securities or promoter
3) Display such notice on its
belonging to shall employ
the promoter or engage in trading systems and website
Removal of the name of No trade can take place in has sold a scheme or
the company from the the securities of the Instruments which equity shares
Unless three years artifice to
are convertible into of the
stock exchange company suspended for a have elapsed since defraud any
the same class of company
temporary period. the listing of that shareholder
equity shares that are during a Delisting Order by the Recognised Stock Exchange
class of equity or other
sought to be delisted period of six
shares. person or any
are outstanding. months prior any act or
No trade can take place in It is an action taken by the to the date of practice that Exit Price
Public notice after Delisting Order
the board
the securities of such Stock Exchanges against is fraudulent, Determination by an
meeting in deceptive or
company the company which the 1) In one English national daily with wide Independent Valuer
manipulative
Pursuant delisting circulation and one regional language
in connection
Delisting can be voluntary to Buy Pursuant to proposal was with such newspaper of the region where the
or compulsory. Generally for non- back of Delisting of Preferential approved. delisting. concerned recognized stock exchange is The recognized stock
equity convertible allotment located exchange shall form a
compliance of listing shares by securities. made by the
conditions as stipulated the company. panel of expert valuers
under SEBI (Listing company. 2) Inform all stock exchanges where the from whom the valuer
equity shares of the company are listed, or valuers shall be
Obligations and Disclosure
about such delisting. appointed.
Requirements) Regulations,
2015 (LODR Regulations).
 VOLUNTARY DELISTING

What- a listed company decides on its own to

permanently remove its securities from a stock Different modes of Voluntary Delisting
exchange. Exit opportunity shall be given to all the
public shareholders holding the equity
shares sought to be delisted, through
reverse book building.
OPTION 1- From all the stock
Delisting from all the recognized stock exchanges exchanges
where securities are listed.
No exit opportunity needs to be given to
the public shareholders.
From few stock
OPTION 2-
exchanges subject to
Delisting from only some of the few stock Voluntary delisting listing at atleast one
exchanges and securities continue to be listed for small companies stock exchange
on the exchange(s) having nationwide having nation wide
terminals. terminals

Voluntary Delisting from all the stock exchanges

Dispatch of
letter of offer •Deposit the total
Right of
Appointment & •In one estimated amount of
Duration of the remaining
approval working day consideration •Shall be
bidding period Minimum shareholders
from receipt calculated on the determined
number of to tender
of in- basis of floor price through book
equity shares equity shares
principle and number of building
•Intimate •To the public equity shares to be acquired
approval process after •Upto a period
to to •Appointment shareholders outstanding. •Date of opening fixation of •Payment of of at least one
stock of merchant •One english of equity
•It shall consist of of the offer floor price consideratio year from the
exchange banker national daily, shares •Post offer
either cash shall not be •Disclose the n date of
•Application for one hindi •In two promoter
•Pass deposited with a later than seven same in the •Final delisting
in principal national working days shareholding+sha
special scheduled working days public application
approval to daily,one from the res accepted •Payment of
resolutio commercial bank, or from the date announceme to stock
concerned regional date of the through eligible consideration
n through a bank guarantee in of the public nt and the exchange
stock language public bids=ninety for shares
postal favour of the announcement letter of
exchange-with newspaper announceme percent of the accepted shall
ballot merchant banker, or offer.
audit report nt. • It shall remain total issued be made out of
Convene a Public a combination of open for a
•In principal Determination shares the balance
board announcement both. period of five
approval by of offer price amount lying in
meeting working days •Participation of
the exchange the escrow
Opening of 25%
in 5 days. Consideration account
escrow account shareholders in
book building
process.

Procedure for Voluntary

delisting from few stock
exchanges subject to listing
at atleast one stock Intimation of Board Meeting to Public notice in one englsih, one Application to the concerned
Convene a Board Meeting Delisting order by the Exchange
Stock Exchange hindi & one regional newspaper. recognized stock exchange
exchange having
nationwide terminals
 Voluntary Delisting by Small Companies

SMALL COMPANY
Convene a Board Meeting Appointment of Application for In Public notice
Pass special resolution Merchant Banker Principal Approval  one English national daily
 paid up capital not exceeding ten crore rupees and
through postal ballot votes to Concerned  one Hindi national daily
Stock Exchange  one regional language

PROCEDURE
 net worth not exceeding twenty five crore rupees cast by public shareholders
in favour of the proposal Determination of With Audit report. newspaper of the region
1) Equity shares traded during the immediately preceding twelve Exit Price where the concerned
should be two times the
In principal recognized stock
calendar months is less than ten per cent of the total number of number of votes cast against Approval by the
shares of such company. exchanges are located
it . Exchange
2) The company has not been suspended by any of the
recognised stock exchanges having nationwide trading terminals
for any non-compliance in the preceding one year.

Final Application Payment to Consent of the Public Shareholders Letter to all public Shareholders
to Stock shareholders Containing-
Exchange 1) Positive consent from atleast 90%
V. T. Somasundaram and M/s. Trichy Distilleries & Chemicals 1) Payment in cash of the public shareholders. 1) Intention of delisting the shares.
Limited vs. Madras Stock Exchange and SEBI 2) Within 15 working
Delisting Order days from the date of 2) The process of inviting the positive 2) Exit price and its justification
The promoter of a small company would be considered to expiry of 75 working consent and finalisation of the
have complied with the condition under regulation 27(3) days as mentioned proposal for delisting of shares to be 3) Seeking the consent of the
(d) if the public shareholders, irrespective of their above made within 75 working days of shareholders for delisting proposal.
numbers, holding ninety percent or more of the public dispatching the Letter
shareholding give their positive consent in writing to the
proposal for delisting.
 An overview of Share Based Employee Benefits Regulation

Employee means
(i) a permanent employee of the company who has been working in India or outside APPLICABILITY
India;
(ii) a director of the company, whether a whole time director or not but excluding an
Any company whose shares are listed on a recognised stock exchange in India, and has a scheme
independent director; or
(iii) an employee as defined in clause (i) or (ii) of a subsidiary, in India or outside India,
or of a holding company of the company
But does not include For direct Involving dealing (iii) satisfying, directly or indirectly, any one of the
(a) an employee who is a promoter or a person belonging to the promoter group; or or indirect in or subscribing following conditions:
(b) a director who either himself or through his relative or through any body corporate, benefit of to or purchasing (a) the scheme is set up by the company or any
directly or indirectly, holds more than ten per cent of the outstanding equity shares of employees securities of the other company in its group;
the company company, (b) the scheme is funded or guaranteed by the
directly or company or any other company in its group
indirectly (c) the scheme is controlled or managed by the
company or any other company in its group.
SCHEMES- IMPLEMENTATION AND PROCESS

COMPENSATION COMMITTEE
Direct Route for ESOP’s Trust Route for ESOP’s
OBJECT- A Company shall constitute a compensation committee for administration and superintendence of
Company forms an employee welfare trust. the schemes. However, the company may designate such of its other committees as compensation
committee if they fulfil the criteria as prescribed in these regulations. Where the scheme is being
COMPANY FORMS AN COMPENSATION
COMMITTEE AND DEFINE THE implemented through a trust the compensation committee shall delegate the administration of such
ELIGIBILITY CRITERIA OF ESOP Company grants loan to the trust for subscribing scheme(s) to the trust.
shares.
COMPOSITION- The compensation committee shall be a committee of such members of the board of
In this case the company issues fresh
shares for ESOP directors of the company as provided under section 178 of the Companies Act, 2013, as amended or
Company issues fresh shares to the trust and
options to the employees modified from time to time.

FUNCTIONS- a) The compensation committee shall, inter alia, formulate the detailed terms and conditions
After vesting period employees can
exercise the option Employees exercises the option of the schemes which shall include the provisions as specified by SEBI in this regard.

b) The compensation committee shall frame suitable policies and procedures to ensure that there is no
Trust transfers the share to employees upon violation of securities laws, as amended from time to time, by the trust, the company and its employees, as
On exercise of an option, company receipt of exercise price.Trust repays the loan to
issues the shares to the emloyees the company applicable.

d) Grant of option, SAR, shares

The explanatory statement to
the notice and the resolution
Shareholders of the company
have to approve the scheme proposed to be passed by
shareholders for the schemes
by passing a special resolution
shall include the information
in the general meeting.
as specified by SEBI
Approval of shareholders by
way of separate resolution in
the general meeting shall be
obtained by the company in
case of:
a) Secondary acquisition for
implementation of the
schemes.
b) Secondary acquisition by
the trust in case the share
capital expands due to capital
expansion undertaken by the
company
or benefits, as the case may be,
to identified employees, during
c) Grant
of option, SAR, shares any one year, equal to or
or other benefits, as the case exceeding one percent of the
may be, to employees of issued capital (excluding
outstanding warrants and
subsidiary or holding
conversions) of the company at
company;
the time of grant of option,
SAR, shares or incentive, as the
case may be.
 PASS SPECIAL SHAREHOLDER NOTICE REPRICING
RESOLUTION APPROVAL
VARIATION
•vary the terms of the •The provisions of •shall disclose full •A company may reprice the
schemes offered shareholders’ details of the options, SAR or shares, which are
pursuant to an earlier approval shall apply to variation, the not exercised, whether or not
•The company shall not resolution of the such variation of rationale therefore, they have been vested if the
vary the terms of the general body but not terms as they apply to and the details of the schemes were rendered
schemes in any yet exercised by the the original grant of employees who are unattractive due to fall in the
manner, which may be employee provided option, SAR, shares or beneficiaries of such price of the shares in the stock
detrimental to the such variation is not other benefits, as the variation. market. Such repricing shall not
interests of the prejudicial to the case may be. be detrimental to the interest of
employees interests of the the employees and shareholders
employees. approval in general meeting has
been obtained for such repricing.

WINDING UP OF SCHEMES NON-TRANSFERABILITY

In case of winding up of the schemes being implemented by a company through trust, the
excess monies or shares remaining with the trust after meeting all the obligations, if any,
shall be utilised for repayment of loan or by way of distribution to employees as
recommended by the compensation committee.
• Option, SAR or any other benefit granted to an employee under the regulations shall not be
transferable to any person.
• No person other than the employee to whom the option, SAR or other benefit is granted
shall be entitled to the benefit arising out of such option, SAR, benefit etc.

Important points for implementation of scheme in the form of a trust:

 If the scheme involves secondary acquisition of shares, such schemes are mandatory to be
implemented through trust.
 There has to be minimum 2 trustees if the trustees are individuals or one person companies, and
minimum 1 trustee if the trustee is a corporate body.
 Trustee cannot be:
 Director/ KMP/ Promoter of the company or its holding company or its subsidiary
company, or relative of such Director/ KMP/ Promoter.
 Any person who holds 10% or more paid up capital of the company.
 Trust can undertake only delivery based transaction (it means that the trust cannot deal in
derivatives)
 Shares held by trust shall be “non-promoter non-public shareholding’.
 Secondary acquisition in one financial year shall not exceed 2% of the paid up capital of the
company at the end of previous financial year.
 Part B- ADMINISTRATION OF SPECIFIC SCHEMES

PARTICULARS EMPLOYEE STOCK OPTION SCHEME
ADMINISTRATION ESOS shall contain the details of the
AND manner in which the scheme will be
IMPLEMENTATION implemented and operated. ESOS shall
not be offered unless the disclosures,
as specified by SEBI, are made to the
prospective option grantees
PRICING Company granting ESOS scheme to its
employees will have the freedom to
determine the exercise price as per the
accounting policies as specified
regulation.
EMPLOYEE STOCK PURCHSE SCHEME
The ESPS scheme shall contain the
details of the manner in which the
scheme will be implemented and
operated.
The company may determine the price
of shares to be issued under an ESPS,
provided they conform to the
provisions of accounting policies under
these regulation
STOCK APPRECIATION RIGHTS SCHEME
The SAR scheme shall contain the
details of the manner in which the
scheme will be implemented and
operated. SAR shall not be offered
unless the disclosures, as specified by
SEBI, are made to the prospective SAR
grantees.
The company shall have the freedom to
implement cash settled or equity
settled SAR scheme. However, in case
of equity settled SAR scheme, if the
settlement results in fractional shares,
then the consideration for fractional
shares should be settled in cash.
GENERAL EMPLOYEE BENEFITS SCHEME
GEBS shall contain the details of the
scheme and the manner in which the
scheme shall be implemented and
operated.
At no point in time, the shares of the
company or shares of its listed holding
company shall exceed ten percent of the
book value or market value or fair value
of the total assets of the scheme,
whichever is lower, as appearing in its
latest balance sheet for the purposes of
GEBS.
RETIREMENT BENEFIT SCHEME
Retirement benefit scheme may be
implemented by a company in
compliance with these regulations, and
any other law in force in relation to
retirement benefits.
The retirement benefit scheme shall
contain the details of the benefits
under the scheme and the manner in
which the scheme shall be
implemented and operated.
At no point in time, the shares of the
company or shares of its listed holding
company shall exceed ten per cent of
the book value or market value or fair
value of the total assets of the scheme,
whichever is lower, as appearing in its
latest balance sheet for the purposes
of RBS.

VESTING A minimum vesting period of one year
in case of ESOS.
ESOS granted in case of merger
/amalgamation - the period during
which the options granted by the
transfer or company were held by him
shall be adjusted against the minimum
vesting period required under this sub-
regulation.
The company may specify the lock-in
period for the shares issued pursuant
to exercise of option.
Shares issued under an ESPS shall be
locked-in for a minimum period of one
year from the date of allotment.
In case of merger/amalgamation- the
lock-in period already undergone in
respect of shares of the transferor
company shall be adjusted against the
lock-in period.
ESPS is part of a public issue and the
shares are issued to employees at the
same price as in the public issue, the
shares issued to employees pursuant to
ESPS shall not be subject to lock-in.
There shall be a minimum vesting
period of one year in case of SAR
scheme.
In case of merger/amalgamation- the
period during which the SAR granted by
the transferor company were held by
the employee shall be adjusted against
the minimum vesting period.

RIGHTS OF OPTION Employee shall not have right to The employee shall not have right to
HOLDER receive any dividend or to vote or in receive dividend or to vote or in any
any manner enjoy the benefits of a manner enjoy the benefits of a
shareholder till he exercises the option. shareholder in respect of SAR granted
to him.

CONSEQUENCE OF The amount payable by the employee, ,

FALIURE TO EXERCISE a) May be forfeited by the company if
OPTION the option is not exercised or
b) May be refunded to the employee if
the options are not vested due to non-
fulfillment of conditions relating to
vesting of option as per the ESOS.
 An overview of Sweat Equity Shares Regulation

Section 2 (88) of the Companies Act, 2013 defines “sweat equity shares”
which means such equity shares as are issued by a
Company to its directors or employees at a
to an unlisted company. Additional information
discount or for consideration, other than cash,
for providing their know-how or making available rights a) The total number of shares to be issued as sweat equity.
in the nature of intellectual property rights or value additions, b) The current market price of the shares of the company.
BOD
by whatever name called. c) The value of the intellectual property rights or technical
knowhow or other value addition to be received from the employee
or director along with the valuation report / basis of valuation.
NOTICE
d) The names of the employees or directors or promoters and their
relationship with the company.
e) The consideration to be paid for the sweat equity.
Specification in
resolution-number of f) The price of issue.
shares, current market Listed Securities- Issue g) Ceiling on managerial remuneration, if any.
price, consideration if acc. to SEBI regulation
anyclass or classes of h) A statement to the effect that the company shall conform to the
directors or employees
accounting policies as specified by SEBI.
SHAREHOLDERS

Unlisted- Issue acc. to

Special resolution
rule 8 of Companies
passed in general
(Share Capital and
meeting Section 54 - Debenture) Rules, 2014. VALUATION OF INTELLECTUAL PROPERTY
Conditions to
issue sweat eq. LOCK-IN
shares of a class  The valuation of the intellectual property rights or of the know how shall be
of shares already carried out by a merchant banker.
issued The Sweat Equity shares shall
 The merchant banker may consult such experts and valuers, as he may deem
be locked in for a period of
fit as per the nature of the industry and property.
three years from the date of  The merchant banker shall obtain a certificate from an independent
allotment. Chartered Accountant that the valuation of the intellectual property or other
value addition is in accordance with the relevant accounting standards.
SEBI (ISSUE OF SWEAT EQUITY) REGULATIONS, 2002

APPLICABILITY

Listed companies which NOT APPLICABLE to an

are issuing sweat equity unlisted company. Unlisted
shares are required to co. coming out with IPO for
comply with SEBI (Issue listing pursuant to issue
of Sweat Equity) sweat equity shares shall
Regulations, 2002. comply with the SEBI (ICDR)
Regulations, 2009.
 INSIDER TRADING

SEBI (Prohibition of Insider Trading) Regulations, 2015

Notified- 15th January, 2015
Repealed- SEBI (Prohibition of Insider Trading) Regulations 1992

“Insider” means any person who is: i)

a connected person; or ii) in
possession of or having access to
unpublished price sensitive
information.
“Trading” means and includes
subscribing, buying, selling, dealing,
or agreeing to subscribe, buy, sell,
deal in any securities, and “trade”
shall be construed accordingly.
“Unpublished price sensitive information” means any
information, relating to a company or its securities,
directly or indirectly, that is not generally available
which upon becoming generally available, is likely to
materially affect the price of the securities and shall,
ordinarily including but not restricted to, information
relating to the following–
(i) Financial results;
(ii) Dividends;
(iii) Change in capital structure;
INFORMATION
(iv) Mergers, de-mergers, acquisitions, delisting,
disposals and expansion of business and such other
transactions;
(v) Changes in key managerial personnel; and
(vi) Material events in accordance with the listing
agreement.

COMMUNICATION OR PROCUREMENT OF UNPUBLISHED PRICE SENSITIVE INFORMATION

Regulation 3 provides that any person shall not: –

▪ communicate, provide, or allow access to any unpublished price sensitive information or –

▪ procure from or cause the communication by any insider of unpublished price sensitive
information,
▪ relating to a company or securities listed or proposed to be listed
▪ except in furtherance of legitimate purposes, performance of duties or discharge of legal
obligations.
 TRADING WHEN IN POSSESSION OF UPSI

Regulation 4- When an insider is in possession of UPSI, he shall not trade in securities.

However there are certain exemptions:

Trades pursuant to In the case of non-individual insiders-

trading plan according • The individuals in possession of UPSI are different
to regulations. from the individuals taking trading decisions
• Decision-making individuals were not in possession
of UPSI when they took the decision to trade
• Appropriate and adequate arrangements were in
Off-market trade between place to ensure (i) regulations are not violated
promoters- (ii) No communication of UPSI by the individuals
(i) Aware of price sensitive info. • Possessing the information to the individuals taking
(ii) Conscious and informed trade trading decisions and there is no evidence of such
decision arrangements having been breached.

TRADING PLAN

1) Insider would be required to submit trading plan in advance to the compliance officer for his approval
and also disclosed to stock exchanges in case of listed securities.

2) It shall be submitted for a minimum period of 12 months.

3) No overlapping of plan with the existing plan submitted by Insider

4) It shall set out either the value of trades to be effected or the number of securities to be traded along
with * nature of the trade * the intervals at, or dates on which such *trades shall be effected.

5) Trading can only commence only after 6 months from public disclosure of plan.

6) No trading between 20th day prior to closure of financial period and 2nd trading day after disclosure
of financial results.

7) Compliance officer to approve the plan.

8) Upon approval of the trading plan, the compliance officer shall notify the plan to the stock exchanges
on which the securities are listed.
The trading plan once approved
▪ Shall be irrevocable
▪ Have to mandatorily implemented
▪ No deviation or execution of any trade in the securities outside the scope of the trading plan.
(Except in few case like where insider is in possession of price sensitive information at the time of
formulation of the plan and such information has not become generally available at the time of the
commencement of implementation)

INITIAL DISCLOSURES

Every person on Shall disclose his holding of Within 7 days

appointment as KMP or securities of the company as on of such
director of a company the date of appointment or appointment
or upon becoming a becoming a promoter, to the or becoming a
promoter company promoter

CONTINUAL DISCLOSURES

Every promoter, If the value of the securities

employee or director of traded, exceed Rs 10 lakh
every company shall with single or series of Within 2 days
disclose to the company transaction in any calendar of such
transaction.
the number of securities quarter
acquired

PENALTY
If any insider who, violates any provision of the SEBI (Prohibition of Insider Trading) Regulation, 2015

• shall be liable to a penalty of twenty-five crore rupees or three times the amount of profits
made out of insider trading, whichever is higher
• Imprisonment upto 10 years.
 MUTUAL FUNDS

INVESTORS SPONSOR- Establishes the trust and is like

POOL RESOURCES
FUND MANAGER
in form of a TRUST
INVESTMENT ACROSS WIDE
CROSS SECTIONS OF SECTORS
DIVERSIFICATION AND RISK
REDUCTION
promoter of the company.
ANALYSIS OF MUTUAL FUNDS
ADVANTAGES RISK INVOLVED
TRUSTEE- Hold the funds property for the Professional • Excessive diversification of
benefit of the unit-holders. Supervise and Management portfolio, losing focus on the
direct the AMC. Monitor performance and Diversification securities of the key
compliance with SEBI regulations. segments.
Convenient • Too much concentration on
Administration blue-chip securities which
Return Potential are high priced and which do
ASSET MANAGEMENT COMPANY- makes not offer more than average
investment in various securities. return.
Low Costs • Fund managers being
unaccountable for poor
results.
CUSTODIAN-hold the securities of Liquidity • Poor planning
various schemes of the fund in its Transparency • Large payments of
custody brokerage and commission.

PLAN Regular Plans Direct Plans

HOW SOLD? Sold through a distributor Sold directly by the AMC
TYPES OF
EXPENSE RATIO Higher Expense Ratio (Due to Lower Expense Ratio (No
PLANS commissions paid to distributor) commission paid to distributor)
RETURNS Potentially lower returns to the Potentially higher returns (Due to
investor (Due to higher expenses) lower expenses)
 TYPE Open Ended Close Ended
PURCHASE Can be purchased on any Can be purchased only during NFO
transaction day
TYPES
REDEMPTION Can be redeemed on any Can be redeemed only at maturity
transaction day
LIQUIDITY High liquidity Low on liquidity

KINDS OF MUTUAL FUNDS

Income Oriented Offers fixed income to investors. Mainly invests in bonds, corporate debentures, Government securities and money market
Schemes instruments, etc.
Growth Oriented These funds offer growth potentialities associated with investment in capital market namely:
Schemes (i) high source of income by way of dividend and
(ii) rapid capital appreciation, both from holding of good quality scrips.
(iii)concentrate on the low risk and high yielding spectrum of equity scrips of the corporate sector.
Hybrid Schemes Combination of fixed income as well as growth orientation. Judicious mix of both the fixed income and also sound equity
scrips. Use- balanced investment management, also known as “balanced funds” .
High Growth Primary investment in high risk and high return volatile securities in the market for investors with a high degree of capital
Schemes appreciation. Mainly target Aggressive investors willing to take excessive risks.
Capital It is a scheme which protects the capital invested in the mutual fund through suitable orientation of its portfolio structure.
Protection
Oriented Scheme
Tax Saving Offer tax rebates to the investors. This is made possible because the Government offers tax incentive for investment in
Schemes specified avenues. For example, Equity Linked Saving Schemes (ELSS) and pensions schemes.
Special Schemes These replicate the performance of particular index such as the BSE, Sensex or the NSE-50 or industry specific schemes or
sectoral schemes. Return approximately equal to that of an index.
Real Estate Close ended mutual funds which invest predominantly in real estate and properties.
Funds
Off-shore Funds Such funds invest in securities of foreign companies with RBI permission.

Leverage Funds Also known as borrowed funds, increase the size and value of portfolio and offer benefits to members from out of the
excess of gains over cost of borrowed funds. Indulge in speculative trading and risky investments.
Hedge Funds Engaged speculative trading, i.e. for buying shares whose prices are likely to rise and for selling shares whose prices are
likely to fall.
Fund of Funds They invest only in units of other mutual funds. Such funds do not operate at present in India.
New Direction Funds They invest in companies engaged in scientific and technological research.
Money Market Invest in short- term debt securities in the money market like certificates of deposits, commercial papers, government
Mutual Funds treasury bills etc. Owing to their large size, the funds normally get a higher yield on such short term investments than
an individual investor.
Infrastructure Debt They invest primarily in the debt securities or securitized debt investment of infrastructure companies.
Fund

1) OFFER DOCUMENT- Contains details of new fund offer (NFO). Filed with SEBI.

2) KEY INFORMATION MEMORANDUM- Gives

OFFER DOCUMENT
summary of SID and SAI. Accompanies every
application. Updated once a year.

Scheme information Statement of additional Contains

document- A document that
contains the details of the scheme.
SID has to be updated every year
• Scheme name
• Scheme structure
• Highlight of scheme
• Risk factors
• Due diligence certificate
from AMC
• Right of unit holder
• Fees and expenses
• Penalties, litigation,etc
information- Contains statutory
information about the fund house. It is
updated at the end of every quarter.
– Information about sponsor, mutual
fund, trustees, custodian and registrar &
transfer agents
– Condensed financial information for
schemes launched in the last three
financial years
– Information on how to apply
– Rights of unit holders
– Details of the fund managers
– Tax, legal and other general
information
– Name of the AMC, Mutual Fund Trust, Trustee, Fund
Manager(s) and Scheme details
– Open and close dates of the issue
– Issue price of the scheme
– Plans and options available in the scheme
– Risk profile of the scheme
– Benchmark
– Dividend policy
– Performance of the scheme and benchmark over last
1, 3, 5 years and since inception
– Loads and expenses
– Contact information and registrars.
 3) Fact Sheets 4) Net Asset Value (NAV) 5) Expense ratio
Usually provided on a monthly basis The fees charged by the scheme to manage
- – The value of one unit of a
by AMCs Contains the following: investors’ money.
mutual fund scheme on a given
– NAV and AUM
date – Fees paid to service providers like trustees,
– Expense ratio, exit loads, average
– It has to be declared by fund Registrar & Transfer Agents, Custodian, etc.
maturity, YTM, modified duration
houses on every business day – Asset management expenses
– Benchmark & Fund manager details
– on AMC website and AMFI – Commissions paid to distributors
– Past performance
website – Other selling expenses including advertising
– Scheme’s allocation & portfolios
– It has to be published in 2 expenses
– Style box
national newspapers – Expenses on investor communication, account
– Other scheme attributes
– like risk category, minimum statements, dividend / redemption cheques /
investment amount, scheme objective, warrants
etc. – Listing fees and Depository fees
– Service tax.

6) Holding period return

Actively managed equity scheme
Holding period return is the total return received from holding an asset or portfolio of
assets over a period of time, generally expressed as a percentage Net assets (weekly Total expense ratio
average) (TER)
100 crore 2.5%
Next 300 crore 2.25%
Next 300 crore 2%
SEBI (MUTUTAL FUNDS) REGULATIONS
Balance AUM 1.75%

Improve the working and regulation of For debt schemes the expense ratio permitted is
Notified- 9th mutual fund market to provide better 0.25 % lower than that allowed for equity funds
Dec, 1996. services to investors and offer a range of
OBJECT innovative products.
SEBI (Mutual Funds) Regulations, 1996 deals with 10 Chapters and 12 schedules

KEY POINTS-

1) The board of trustees has to approve the schemes launched by AMC and offer documents are filed with SEBI.

2) Adequate disclosures to enable investors make informed decisions.

3) The listing of close-ended schemes is mandatory and they should be listed on a recognised stock exchange within six months from the closure of
subscription.

Listing is not mandatory in case:

a) if the scheme provides for monthly income or caters to senior citizens, women, children and physically handicapped;
b) if the scheme discloses details of repurchase in the offer document; or
c) if the scheme opens for repurchase within six months of closure of subscription.
d) if the scheme is a capital protection oriented scheme.

4) If the minimum and maximum amount of sale, redemption and periodicity is disclosed in the offer document then units of a close-ended scheme
can be opened for sale or redemption at a predetermined fixed interval.

5) Conversion of close-ended scheme into an open-ended scheme with the consent of a majority of the unit-holders and disclosure is made in the
offer document about the option and period of conversion.

6) Units of close-ended scheme may be rolled over by passing a resolution by a majority of the shareholders

7) The AMC is required to refund the application money if minimum subscription is not received, and also the excess over subscription within five
working days of closure of subscription.

8) Only equity-linked saving scheme can be opened for subscription for more than 15 days. The minimum subscription and the extent of over
subscription that is intended to be retained should be specified in the offer document. In the case of over-subscription, all applicants applying up to
5,000 units must be given full allotment subject to over subscription.

9) A close-ended scheme shall be wound up on redemption date, unless it is rolled over, or if 75% of the unit-holders of a scheme pass a resolution
for winding up of the scheme; if the trustees on the happening of any event require the scheme to be wound up; or on SEBI’s directions.
 COLLECTIVE INVESTMENT SCHEME

C
MANAGED BY CIS PORTFOLIO
Trust based scheme that
comprises a pool of assets. CIS MANAGER

CONTRIBUTION

INVESTOR 1 INVESTOR 2 INVESTOR 3

Unit certificate issued
should be-
a) Freely transferable,
Investors have a proportional stake in the CIS b) must be listed.
Collective Investment Scheme - refers to any scheme according to their contribution.
under which,— ‘Unit’= portion or part of the CIS portfolio that
(i) The contributions are pooled and utilized for is owned by the investor.
the purposes of the scheme or arrangement;

(ii) The contributions are made to such scheme

by the investors with a view to receive profits, act as a trustee of any
income, produce or property, whether scheme;
movable or immovable;

(iii) The property, contribution or investment undertake any launch any

forming part of scheme, is managed on activity other scheme for the
behalf of the investors; than that of RESTRICTIONS purpose of
managing the investing in
scheme; securities
(iv) The investors do not have day-to-day control
over the management of the scheme.
invest in any schemes
floated by it
 O EXCLUSIONS
Managing funds
and properties
of the scheme
COOPERATIVE • made or offered by a co-
obtain adequate exercise due SOC. operative society.
insurance against diligence and care
the properties of in managing assets
the schemes. and funds • providing for any Scheme,
SCHEMES Pension Scheme or the
Insurance Scheme

OBLIGATIONS •under which deposits are

hold a meeting liability towrards
accepted
of Board of unit holders for
•-by NBFC.
Directors at least its acts of
commission or DEPOSITS •-under section 74 of the
twice in every Companies Act, 2013.
three months. omissions
•-by a company declared as a
Nidhi or a mutual benefit
society

Monthly receipts
for monies appoint registrar •under which contributions made
recieved, and and share MUTUAL FUND are in the nature of subscription
report of transfer agents to a mutual fund.
paymetns to SEBI
•falling within the meaning of
CHIT BUSINESS Chit business.

•being a contract of insurance

INSURANCE
 SEBI (OMBUDSMAN) REGULATION, 2003

Investor protection is important for economic development.

Corporate accountability and investor’s confidence is necessary for integrity of

financial markets and economic wellbeing.

SALIENT FEATURES OF SCORES

Web- Complaints Instant Unique Complaint

enabled, can be acknowledgm complaint forwarded to
24/7 access lodged ent of receipt registration entity for
online anytime from of complaint no. for redressal.
anywhere through email. reference

Entity SEBI peruses Investor can Entity and Every Complaints

uploads ATR and view status of investor can complaint are saved
Action closes the the complaint seek and give has an on central
Taken complaint if online. clarification. audit trail. database.
Report. satisfied.
 PROCEDURE TO LODGE A COMPLAINT IN SCORES

Complaint Submission
•http://scores.gov.in Complaint
registration •Name details •Email
•click on “Complaint •PDF(1MB) •creation of
Registration” under •Address attached for acknowledging
“Investor Corner”. •personal •Category unique
•Email support receipt of complaint
details •entity details registration no. will be sent to
Registartion on •complaint •State •nature of •used for future investor.
SCORES portal Mandatory Attachments Acknowledgement
details complaint correspondance
fields

SEBI OMBUDSMAN REGULATION

A. Powers and Functions of Ombudsman

• To receive complaints against any intermediary or a listed company or
An independent person both;
appointed to hear and • To consider such complaints and facilitate resolution
act upon citizen’s • To approve a friendly or amicable settlement of the dispute between the
complaint about parties;
government services. • To adjudicate such complaints in the event of failure of settlement
C. Grounds for filing complaint:
A person may lodge a complaint on the following grounds either
to SEBI or to the Ombudsman concerned:
(i) (i) Non-receipt
. of
(a) refund orders, allotment letters in respect of a public
issue of securities of companies or units of mutual funds
or collective investments schemes.
(b) share certificates, unit certificates, debenture
certificates, bonus shares
(c) dividend by shareholders or unit-holders;
(d) interest on debentures, redemption amount of
debentures or interest on delayed payment of interest on
debentures;
(e) interest on delayed refund of application monies;
(f) annual reports or statements pertaining to the
portfolios;
(g) redemption amount from a mutual fund or returns
from collective investment scheme;
(h) letter of offer or consideration in takeover or buy-
back offer or delisting;
(i) statement of holding corporate benefits or any
grievances in respect of corporate benefits, etc;
(ii) Non-transfer of securities by an issuer company, mutual
fund, Collective Investment Management Company or
depository within the stipulated time;
(iii) Any grievance in respect of public, rights or bonus issue
of a listed company;
(iv) Any grievance in respect of issue or dealing in securities
against an intermediary or a listed company.
B. Procedure for filing a complaint
•Make a complaint against a listed company or an intermediary
to the Ombudsman within whose jurisdiction the registered or
corporate office of such listed company or intermediary is
COMPLAINT
located.
•If SEBI has not notified any Ombudsman for a particular locality
or territorial jurisdiction, the complainant may request the
Ombudsman located at the Head Office of the SEBI for
NO NOTIFIED
OMBUDSMAN forwarding his complaint to the Ombudsman of competent
jurisdiction.
•The complaint is required to be in writing duly signed by the
FORM OF complainant or his authorised representative (not being a legal
COMPLAINT practitioner) in the Form specified in the Schedule to the
regulations and supported by documents, if any.
DISMISSAL OF
COMPLAINT
•The Ombudsman may dismiss a complaint on any of the grounds
specified under the Regulations or when such complaint is
frivolous in his opinion.
Power to call for information
• An Ombudsman may require the company or the intermediary or any
other person, institution or authority to provide any information or
furnish certified copy of any document relating to the subject matter
of the complaint which is or is alleged to be in its or his possession.
 • In the event of the failure Ombudsman may, if he deems fit, draw the inference that the information, if provided or copies if furnished, would be
unfavourable to the listed company or intermediary.
• The Ombudsman is required to maintain confidentiality of any information or document coming to his knowledge or possession except
as otherwise required by law or with the consent of the person furnishing such information or document.
• The Ombudsman has been empowered to disclose information to the extent considered by him to be reasonably required to comply with the
principles of natural justice and fair play in the proceedings.

E. Settlement by Mutual F. Award and Adjudication G. Display of the Particulars of the

Agreement
• Ombudsman shall endeavour to
promote a settlement of the
complaint by agreement or
mediation.
D. Finality of Award
• An award given by the Ombudsman shall be
final and binding on the parties and persons
claiming under them respectively.
• Any party aggrieved by the award on
adjudication may file a petition before SEBI
within one month from the receipt of the
award or corrected award setting out the
grounds for review of the award.
• In case the matter is not resolved in of one month
Ombudsman
of the receipt of the complaint or such extended
• Every listed company or intermediary
period.
is required to display the name and
• He may, based upon the material placed before him
address of the Ombudsman as
and after giving opportunity of being heard to the
specified by SEBI to whom the
parties, give his award in writing or pass any other
complaints are to be made’
directions or orders as he may consider
• The listed company or intermediary is
appropriate.
required to give full disclosure about
• Such award to be made within a period of three
the grievance redressal mechanism
months from the date of the filing of the
through Ombudsman in its offer
complaint.
document or client agreement.
• The Ombudsman should send his award to the
parties to the adjudication to perform their
obligations under the award.

•
SEBI(INFORMAL GUIDANCE) SCHEME 2003- Made in the interests of better regulation of and orderly development of the Securities market. Following
persons may make a request for informal Guidance under the scheme-

ANY INTERMEDIARY Any LISTED Company Any company Any mutual fund trustee Any acquirer or
registered with SEBI
which intends company or asset management prospective acquirer
to get any of company under SEBI Takeover
its securities Regulation, 2011.
listed

TYPES OF GUIDANCE

No-action letters Interpretive letters

SEBI indicates that the Department would SEBI provides an interpretation of a specific
or would not recommend any action provision of any Act, Rules, Regulations,
under any Act, Rules, Regulations, Guidelines, Circulars or other legal
Guidelines, Circulars or other legal provision being administered by SEBI in the
provisions administered by SEBI to the context of a proposed transaction in
Board if the proposed transaction securities or a specific factual situation.
described in a request made under
this provision.
The request seeking informal guidance should state
that it is being made under this scheme and also state
whether it is a request for a no-action letter or an
interpretive letter and should be accompanied with
prescribed fees and addressed to the concerned
Department of SEBI.

OVERVIEW
National level institutions
State level institutions
Qualified Institutional buyers
Foreign portfolio investors
Alternative investment funds
NATIONAL LEVEL INSTITUTIONS
ALL INDIA DEVELOPMENT
BANKS
1) Provide credit to large and
medium scale enterprise
2) Promote development of
small scale industrial units.
3) IDBI- provides financial
assistance for diversified needs
of medium and large scale
industries, both directly and
indirectly.
4) IFCI- It aims to provide
financial assistance to industry
by way of loans, underwriting,
subscribing, etc
5) SIDBI- principal financial
institution for promotion,
financing and development of
small scale industries in the
economy.
6) IIBI- principal credit and
reconstruction agency for sick
industrial units.
QUALIFIED INSTITUTIONAL BUYERS
Buy shares on large scale, have expertise and financial proficiency to evaluate and invest in
capital market.
15 (15) - Capital market investment institutions
Private Equity
Angel funds
High net worth individuals
Venture capital
Pension Funds
SPECIALISED FINANCIAL
INSTITUTIONS
1) Serve financial needs of
trade and commerce.
2) IFCI Venture Capital Funds
Ltd (IVCF):- Has the objective
of broadening entrepreneurial
base in the country by
facilitating funding to ventures
involving innovative product/
process/technology.
3) ICICI Venture Funds Ltd:-
a technology venture finance
company, set up to sanction
project finance for new
technology ventures.
4) Tourism Finance
Corporation of India Ltd.
(TFCI):- set up by the
Government of India for
promotion and growth of
tourist industry in the country.
INVESTMENT INSTITUTIONS
1) Most popular financial
intermediaries
2) For small savers and
investors.
3) LIC- has the objective of
spreading life insurance much
more widely and in particular
to the rural area. It also
extends assistance for
development of infrastructure
facilities and other financial
institutions.
4) UTI- It mobilizes savings of
small investors through sale of
units and channelizes them
into corporate investments
mainly by way of secondary
capital market operations.
5) GIC- formed for the purpose
of superintending, controlling
and carrying on the business of
general insurance or non-life
insurance
CAPITAL MARKET INVESTMENT INSTITUTIONS
• Role of financial institutions – Handling and monitoring financial dealings and
matters in the economy.
• Provide a variety of financial products and services to fulfill the varied needs of
the commercial sector.
• Provide assistance to new enterprises, small and medium scale enterprises as
well as industries established in backward areas.
• Reduce regional disparities by inducing widespread industrial development.
STATE LEVEL INSTITUTIONS
HIGH NETWORTH
INDIVIDUALS
Act as catalyst for promotion of investment and
industrial development in respective states.
1) State Financial Corporations- SFCs have been set
up with the objective of catalysing higher investment,
generating greater employment and widening the
ownership base of small and medium industries. There
HNI = Distinguished from other retail segment
are 18 SFC’s in the country.
based on their net wealth, assets and investible
2) State Industrial Development Corporations- have surplus.
been set up with the objectives of promoting industrial
In India, HNI = over 2Cr of investible capital
development in the respective States and providing
financial assistance to small entrepreneurs.
Emerging HNI = those whose investable surplus
They are also involved in setting up of medium and large is 25 Lakhs to 2 Cr
industrial projects in the joint sector/assisted sector in
collaboration with private entrepreneurs or wholly-
owned subsidiaries.
VENTURE CAPITAL
PROMOTER- Give some ownership and control of
business
V. CAPITALIST will give capital for limited period of
3-5 yrs.
NEEDS- a) Private co. b) potential to provide high
returns c) Equity investment
 FOREIGN PORTFOLIO INVESTORS ANGEL INVESTORS

a mutual fund, venture capital fund,
Alternative Investment Fund and foreign
venture capital investor registered with
SEBI;
a foreign portfolio investor other than
individuals, corporate bodies and family offices;
a scheduled commercial bank;
a multilateral and bilateral development financial
institution;
a state industrial development corporation
an insurance company registered with the
Insurance Regulatory and Development Authority
a provident fund with minimum corpus of twenty
five crore rupees;
a pension fund with minimum corpus of twenty
five crore rupees;
Systemically important non-banking financial
companies.
FPI= person registered under SEBI (Foreign Portfolio Investor) Regulations, 2014.
• Category I FPIs include:
(i) Government and Government related investors such as central banks, sovereign wealth funds, international or multilateral
organizations or agencies including entities controlled or at least 75% directly or indirectly owned by such Government and
Government related investor(s);
(ii) Pension funds and university funds;
(iii) Appropriately regulated entities such as insurance or reinsurance entities, banks, asset management companies, investment
managers, investment advisors, portfolio managers, broker dealers and swap dealers;
(iv) Entities from the Financial Action Task Force member countries, or from any country specified by the Central Government by an
order or by way of an agreement or treaty with other sovereign Governments, which are–
# appropriately regulated funds; Angel fund- also called business angel,
# unregulated funds whose investment manager is appropriately regulated and registered as a Category I foreign portfolio investor. angel funder, seed investor.
However the investment manager undertakes the responsibility of all the acts of commission or omission of such unregulated fund;
# university related endowments of such universities that have been in existence for more than five years; Angel investor gives capital to startup
(v) An entity (A) whose investment manager is from the Financial Action Task Force member country and such an investment manager in exchange of convertible debt or
is registered as a Category I foreign portfolio investor; or (B) which is at least 75% owned, directly or indirectly by another entity, ownership equity.
eligible under sub-clause (ii), (iii) and (iv) of clause (a) of this regulation and such an eligible entity is from a Financial Action Task Force
member country. However such an investment manager or eligible entity undertakes the responsibility of all the acts of commission or Working- a) Invest online through
omission of the applicants seeking registration under this sub-clause. equity crowd funds
Category II FPIs include all the investors not eligible under Category I foreign portfolio investors such as –
(i) appropriately regulated funds not eligible as Category-I foreign portfolio investor; b) Organize angel groups or networks.
(ii) endowments and foundations;
(iii) charitable organisations; c) Share research, pool investment
(iv) corporate bodies; capital, provides advice.
(v) family offices;
(vi) individuals;
(vii) appropriately regulated entities investing on behalf of their client, as per conditions specified by the Board from time to time;
(viii) Unregulated funds in the form of limited partnership and trusts.

PENSION FUNDS
PRIVATE EQUITY
1) Investors and funds invest directly into private company. TYPES
BY: Employer FOR: Employees
Or conduct buyout of public company.
WHY: To facilitate & organize investment of retirement funds of employees LEVERAGED VENTURE CAPITAL GROWTH CAPITAL
2) Capital raised from retail and institutional investors used for BUYOUT
PENSION FUND: i) common asset pool
Equity investment Minority
• Strengthening the balance sheet Make equity in less mature investment in
ii) Generates stable growth
• Funding new technology investment as a company for- companies looking
iii) Provide pension to employees after retirement • Expanding working capital part of transaction for
of acquiring ▪ Early launch
Pension Fund 3) Need long holding periods ▪ Early Capital to expand,
company from
Pension u/Act or Statute shareholders with development Restructure
4) Raise money from investors, angel investors, institutions with diversified
use of financial ▪ Expansion of operations, Enter
Govt. Pension portfolio.
Informal sector Formal sector leverage. business new market
Private equity is away to invest in asset that isn’t Without changing
Voluntary pension
ACTS- a) Pension under EPF & MP Act, 1952 publicly traded, or to invest in a publicly traded ownership.
asset with the intention of taking it private.
b) Pension under coal mines PF & MP Act, 1948

c) Gratuity under Payment of Gratuity Act, 1972

 ALERTNATIVE INVESTMENT FUNDS
DEFINITON
i) Privately pooled investment
fund
ii) In the form of a trust or a
company or a body corporate or a
Limited Liability Partnership
iii) Not presently covered by any
Regulation of SEBI governing fund
management nor coming under
the direct regulation of any other
sectoral regulators in India
CATEGORY 1
Includes VCF, SME
Funds, Social Venture
Funds (SVF), Infra Funds
etc.
NOT AIF
• Family trusts for benefit of relatives
• ESOP Trusts set up under the SEBI (Shares Based
Employee Benefits) Regulations, 2014
• Employee welfare trusts or gratuity trusts for
employees.
• Holding companies
• Special purpose vehicles not established by fund
managers, including securitization trusts, regulated
under a specific regulatory framework.
• Any such pool of funds which is directly regulated by
any other regulator in India.
CATEGORIES OF AIF
CATEGORY 2 CATEGORY 3
Includes Private Equity Include Hedge Funds
Funds or Debt Funds
 CAPITAL MARKET INSTRUMENTS

SHARES WITH DIFFERENTIAL VOTING RIGHTS

Represents
Section 43(a)(ii) of the Companies Act, 2013, authorized equity share capital with differential
fractional
rights as to dividend, voting or otherwise, can be issued subject to following conditions.
ownership

1) Authorized by articles of association

Equity shareholder
undertakes the
Ordinary Equity maximum
2) Authorized by Ordinary resolution in general meeting.

share entrepreneurial For listed co.- approval by shareholders by postal ballot.

shares risk associated with
a business venture.
3) DVR - NOT exceed 26% of post issue paid up equity share
capital.

Is the member of 4) Consistent track record- distributable profit- last 3 yrs.

the company and
has voting rights
5) NO DEFAULT- filing financial statement/ annual return- last 3
yrs

6) NO DEFAULT- i) payment of dividend ii) repayment of matured

1) Payment of dividend, deposit iii) redemption of preference shares/debentures iv) or
either as a fixed amount or interest on any of them
at a fixed rate

Issued share capital of

the company which 2) Repayment, in the 7) NO DEFAULT- i) payment of dividend on preference shares ii)
carries or would carry case of a winding up or repayment of term loan.
a preferential right repayment of capital
W.R.T
8) NOT penalized during last 3 years.
PREFERENCE
SHARES
S.43 9) NO CONVERSION of existing share capital with voting rights
into equity share capital carrying differential voting rights and
vice-versa.
 BONDS DEBENTURES

Section 2(30) of the Companies Act, 2013 defines debentures. “Debenture” includes
BOND= DEBT SECURITY CHARACTERSTICS debenture stock, bonds or any other instrument of a company evidencing a debt,
whether constituting a charge on the assets of the company or not.
Issuer has to pay specific rate of a) Issued by government/ corporation
interest and repay principal
b) Maturity- few days to 20-30 years
amount later.
c) Types- Bills/ short term and long term
Bond holder = creditor duration=
bonds FCCB AND FCEB
5-10 years.
d) Interest= semiannual or annually at
certain % of face value= “coupon payment”
FOREIGN CURRENCY CONVERTIBLE BONDS FOREIGN CURRENCY EXCHEANGABLE BONDS
The FCCB is used to raise funds from the The FCEB is used to raise funds from the
international markets against the security international markets against the security
and convertibility of shares of the and exchangeability of shares of another
company company.
A bond expressed in foreign currency A bond expressed in foreign currency
Government Bonds Issued either directly by Government of India or by the Public Sector Units The principal and the interest in respect of The principal and the interest in respect of
(PSU’s) in India. which is payable in foreign currency. which is payable in foreign currency.
Secured bonds as they are backed up with security from Government. Issued by an issuing company, being an Issued by an issuing company, being an
Generally offered with low rate of interest compared to other types of Indian company. Indian company.
bonds. Subscribed by a person resident outside Subscribed by a person resident outside
India. India.
Corporate Bonds Issued by the private corporate companies.
Secured or non-secured bonds. Convertible into equity shares of the Exchangeable into equity shares of another
Consider the credit rating given by Credit Rating Agencies before investing company. company, being offered company which is
in these bonds. an Indian company.

Banks and other Issued by banks or any financial institution.

financial The financial market is well regulated and the majority of the bond markets
institutions bonds are from this segment.
DERIVATIVES
Tax saving bonds In India, the tax saving bonds are issued by the Government of India for
providing benefit to investors in the form of tax savings.
Along with getting normal interest, the bond holder would also get tax
benefit.
In India, all these bonds are listed in National Stock Exchange and Bombay DERIVE VALUE
Stock Exchange in India; hence they can be easily liquidated and sold in the
open market.
EXAMPLES OF DERIVATIVES

Futures, options, swaps, caps, floor, collars etc.

The most popular derivative instruments are

futures and options.

 INDIAN DEPOSITORY RECEIPTS FUTURES AND OPTIONS
INDIAN INDIA
INDIAN INDIAN FUTURES- FUTURE contract to buy/sell a predetermined asset at predetermined
FOREIGN
DEPOSITORY INVESTOR price
COMPANY ISSUE SHARES ISSUE DEPOSITORY
RECEIPTS a) Standardized b) Centralized; ensures liquidity

LONG POSITION SHORT POSITION

ACTUAL SHARES
Contract is Purchased Contract is Sold
BUYER agrees to receive delivery SELLER agrees to make delivery

OPTIONS- Options gives right NOT obligation- to take/make delivery- ON/BEFORE

specified date at stated price.
1) According to Section 2(48) of the
Only one party has right; other has obligation.
AUTHORIZE Companies Act, 2013 “Indian
Depository Receipt” means any Since, the other party bears risk- he receives payment called “option premium”
OVERSEAS instrument in the form of a
CLASSIFICATION
CUSTODIAN depository receipt created by a
domestic depository in India and CALL PUT
authorised by a company BUYER SELLER
incorporated outside India making Right to take delivery Right to make delivery
an issue of such depository receipts”

2) Standard Chartered PLC is only EUROPEAN AMERICAN

company to offer IDR in the Indian Option can be exercised only on expiry Exercised on or before expiry date
date
market.
Followed in India.

WARRANT- Signifies optional conversion.

Warrant means an option issued by a company whereby the buyer is granted the right to purchase a number of shares of its equity share capital at a given exercise price during a given period.

Holder has the right, NOT obligation to convert.

Investor will convert if beneficial

Not converted- warrant lapses

 Structure of Capital Market

ANCHOR INVESTOR
BOOK BUILDING
Means a person who makes application in a public issue of 10 cr rs.
It is the process to understand demand and assess price to NOTES
determine quantum or value of IDR or securities. The process is Allocation to Anchor Investor
very transparent and any investor can see the price of the share on a) Book Building process under regulation 6(1) and 6(2), AMOUNT NO. OF ANCHOR INVESTOR AMT TO EACH AI
the website of the exchange. 5% allocation available to mutual funds shall be eligible 2 cr Max. 2 -
for allocation under the balance available for qualified 2-25 cr 2-15 1 cr
In case of an issue made •not less than 35 % to retail institutional buyers. More than 25 cr 5-15 1cr
through the book building individual investors;
Every additional 25 cr Additional 10 1cr
process as per regulation •not less than 15 % to non- b) Issuer may allocate up to 60% of the portion available
6(1), then the allocation in institutional investors; for allocation to qualified institutional buyers to an
the net offer to public •not more than 50% to qualified anchor investor BIDDING Opens- one day before allocation
category shall be as follows: institutional buyers, 5 % of which Closes- on the day of bidding by anchor investors.
shall be allocated to mutual fund c) If the retail individual investor category is entitled to
more than 50% on proportionate basis, the retail LOCK-IN- 30 days from allotment in public issue.
individual investors shall be allocated that higher
In case of an issue made •not more than 10% to retail Anchor investor portion
percentage.
through the book building individual investors; From QIB 60%
process under regulation •not more than 15% to non- FOR domestic mutual funds 1/3rd
6(2), the allocation in the net institutional investors; Book Built Issue, the issuer in
offer to public category shall •not less than 75% to qualified consultation with merchant
be as follows: institutional buyers, 5% of which banker, fixes the Price band.
shall be allocated to mutual fund

In an issue made other than
through the book building
process, allocation in the net
offer to public category shall
be made as follows:
•Minimum 50% to retail individual
investors; and
•Remaining to: •(i) individual
applicants other than RII and •(ii)
other investors including corporate
bodies or institutions, irrespective
of the number of specified
securities applied for;
Fixed Price Issue- Issue + merchant
banker fix the price (Face Value +
Share Premium)
If the investors subscribe
minimum 90% of the offer, the
issue succeeds.

BOOK BUILDING PROCEDURE

Registration of final
Appoints Lead Filing of Red Enter into Lead book runner Pre issue Issue opens and
File draft offer prospectus with
Book herring agreement with appoints syndicate advertisement Investor submits
document for ROC.
Runners/Co prospectus stock exchange members to shall be made. forms at bidding
Book Runners, Observation- with SEBI, for online offer underwrite / sub centres.
of securities and underwrite the issue. Bidding and
Lead Merchant from SEBI and In- Exchange and
make allocation for Electronic Allocation/Manner
Banker (LMB) principle Registrar of
application for LBR/SN to finalise anchor investor bidding process of Allotment.
to act as Lead approval for Companies
In-principle bidding/collection opens one day and price
Book Runner. listing- from
centres prior the issue. determination.
exchanges. approval.
ASBA- APPLICATION SUPPORTED BY BLOCKED AMOUNT SCSB- SELF-CERTIFIED SYNDICATE BANK GSO- GREEN SHOE OPTION

SEBI’S endeavor to make public issue process more efficient. 1) Green Shoe Option means an option of allocating shares in excess of
the shares included in the public issue and operating a post-listing price
Offers facility stabilizing mechanism.
Application to
of applying
subscribe to issue
Authorization to through ASBA 2) ICICI bank was the first to use Green Shoe Option in its public issue
contains block through book building mechanism in India.
application
money 3) ICDR Regulations, the over-allotment component under the Green Shoe
Certificate in mechanism could be up to 15% of the IPO.
prescribed format
4) Prior to the IPO, the stabilising agent would borrow such number of
Include bank’s name in shares to the extent of the proposed Green Shoe shares from the pre-issue
Investor- will receive interest on amount SEBI its list of SCSB shareholders. These shares are then allotted to investors along with the
blocked till IPO shares.

5) IPO proceeds received from the investors for the IPO shares, are
Designated branch remitted to the Issuer Company, while the proceeds from the Green Shoe
ALLOTMENT Moved to for investors Shares are parked in a special escrow bank account, i.e. Green Shoe
investor’s A/C Escrow Account.
(NO
ALLOTMENT) 6) During the price stabilisation period, if the share price drops below the
Controlling branch for book-built price the stabilising agent would utilize the funds lying in the
Registrar of the issue Green Shoe Escrow Account to buy these shares back from the open
APPOINT Stock Exchanges and market.
Merchant Bankers
7) Any surplus lying in the Green Shoe Escrow Account would then be
transferred to the Investor Protection and Education Fund established by
SEBI.

This gives rise to the following three situations:

Finalization of basis of
allotment. Situation #1 - Where the stabilising agent manages to buyback all of
In the Bank A/C shares-
BLOCKS MONEY as specified in The funds would be used to buy shares from the open market. These
Physically OR SCSB
ASBA and it shares would be temporarily held in a special depository account (Green
electronically Till withdrawal/failure of the
remains Shoe Demat Account).
Investor issue or till
blocked till
submits ASBA withdrawal/rejection of the
They would then be returned back to the lender shareholders, within a
application
maximum period of two days after the stabilisation period.

Upload data through web enabled interface by SEBI In electronic bidding system

SCSB
Registrar to issue unblocks the relevant Basis of allotment
Sends request
bank accounts and for transferring the finalised
requisite amount to the issuer’s account.
Situation #2 - where the stabilising agent manages to buyback none of the Green Shoe Shares-
a) share prices have fallen below the Issue Price
b) Share prices continue to trade above the listing price
Here, the stabilising agent is under a contractual obligation to return the GSO shares that had
initially been borrowed from the lending shareholder(s).
For this the issuer company would allot shares to the stabilising agent into the Green Shoe Demat
Account
These shares would then be returned by the stabilising agent to the lending shareholder(s),
thereby squaring off his responsibilities.
Situation #3 - where the stabilising agent manages to buy-back some of the Green Shoe Shares –
The share prices witness a drop in the initial stages of the price stabilisation period, but recover towards the
latter stages.
The issuer company would allot the differential shares into the Green Shoe Demat Account to cover up the
shortfall, and the Stabilising Agent would discharge his obligation to the lending shareholder(s) by returning the
shares that had been borrowed from them.
Both in Situation #2 and #3, the issuer company would need to apply to the exchanges for obtaining listing/
trading permissions for the incremental shares allotted by them, pursuant to the Green Shoe mechanism.
 18(15) STOCK EXCHANGE MECHANISM

TRADING MECHANISM IN INDIA

TYPES OF SECURITIES

Products- equity shares, warrants, debenture, etc. TYPES OF SECURITIES

Form- dematerialized trading

Dematerialization process- by which physical certificates of an

investor are converted in securities in electronic form and
credited to the investor’s account with his Depository Participant
(DP). LISTED- have signed PERMITTED–not listed on an
listing agreement with exchange but are frequently
Mechanism- screen based platform provided by stock exchanges
stock exchange traded on other exchanges in
Currently, settlement cycle is (T+2 days) T means trading day. India. Must meet norms.

MARGINS

Initial margin- minimum amount as

NIFTY AND SENSEX
NIFTY
Nifty is the market indicator of NSE.
It is a collection of 50 stocks. It is also
referred to as Nifty 50.
It is owned and managed by India Index It was first published in 1986.
Services and Products Ltd. (IISL).
SENSEX
Sensitive Index or Sensex is the stock
market index indicator for the BSE
It is based on the market weighed stock
index of 30 companies based on the
financial performance.
percentage of transaction value,
Advance payment- value given by client to broker before actual
of stock transaction. The purchase.
amount of credit a broker
or lender extends to a
customer for stock
purchase Maintenance margin- minimum
amount, calculated as a percentage of
market value of the securities. As on last
trading day’s closing price, to be
maintained by client with the broker.
 BOOK CLOSURE AND RECORD
BLOCK DEAL BULK DEAL
DATE

Book closure - Periodic closure of the Register of Members and
Transfer Books of the company, determine their entitlement to
dividends or to bonus or right shares or any other rights pertaining to
shares of shareholders.
Record date is the date on which the records of a company are
closed.
Section 91= book closure for maximum of 45 days in a year and for
not more than 30 days at any one time.
Separate trading window to facilitate execution of large
trades
Introduced from - January 01, 2018.
Session Timings:
a) Morning Block Deal Window: 08:45 AM to 09:00 AM.
b) Afternoon Block Deal Window: 02:05 PM to 2:20 PM.
Minimum order size for execution of trades=10 crores
Bulk deal is a trade, where total quantity bought or sold is more than
0.5% of the number of equity shares of a listed company.
Transacted by the normal trading window
Bulk deals are market driven and take place throughout the trading
day.
Stock broker = required to reveal to the stock exchange about the
bulk deals on a daily basis.
Bulk orders are visible to everyone.

SEDI (LODR) Regulations - companies to give 7 working days Single trade= notified to the exchange immediately
The stock exchange disseminates the information on
advance notice of book closure or record date to stock exchange
block deals to the general public on the same day, after Multiple trades= notified to the exchange within one hour from the
where the securities of the companies are listed
the market hours. closure of the trading.

MARKET SURVEILLANCE

Ensuring market integrity is the core objective of regulators. Surveillance mechanisms to detect
any irregularities must also be equally developed. Exchanges adopt automated surveillance tools
that analyze trading patterns and are installed with a comprehensive alerts management
system.
A. Preventive Surveillance –
• Stringent On boarding norms for Trading Member
• Index circuit filters - Coordinated trading halt 3 stages of the index movement, either way
viz., at 10%, 15% and 20% based on previous day closing index value.
• Trade Execution Range - Orders are matched and trades take place only if the trade price
is within the reference price and execution range.
• Order Value Limitation - Maximum Order Value limit allowed per order.
• Cancel on logout – cancels outstanding trades in case of user log out.
• Kill switch - execution of kill switch cancels all outstanding orders.
• Risk reduction mode - Limits beyond which orders level initiation of risk management
shall be initiated instead of trade level.
• Compulsory close out – If Incoming orde crosses available margins it will be cancelled and
further trading will be disallowed.
• Periodic call auction - Shifting the security form continuous to call auction method
• Rumour Verification-Unannounced news is tracked, informed and reply of
company disseminated.
• Fixed Price Band / Dynamic Price band - Limits applied within which securities
shall move to curb volatility. For non-derivative securities price band is 5%, 10% &
20%. For Derivative products an operating range of 10% is set and subsequently
flexed based on market conditions.
• Trade for Trade Settlement - The settlement of scrip’s available in this segment is
done on a trade for trade basis and no netting off is allowed.
• Capital adequacy check - Refers to monitoring of trading member’s performance
and automatic disablement from trading when limits are breached
B. Post trade surveillance -
• End of day alert – Alerts generated using statistical tools. The tool highlights
stocks which have behaved abnormally form its past behaviour
• Pattern recognition model – Models designed using high end tools and trading
patterns which itself identifies suspects involving in unfair trading practise.
• Transaction alerts for member - As part of surveillance obligation of members
the alerts are downloaded to members under 14 different heads.
 OTHER CONCEPTS

REPO RATE CASH RESERVE RATIO (CRR) Statutory Liquidity Ratio (SLR) Reverse Repo Rate (RRR)

a) The rate at which the Commercial Banks borrow
money from RBI.
b) Reduction in Repo Rate = money at a cheaper
rate.
c) Increase in Repo Rate = money at expensive rate.
d) The increase in the Repo Rate = increase the cost
of borrowing and lending of the banks which will
discourage the public to borrow money and
encourages them to deposit.
a) Cash reserve ratio is the amount which the
commercial banks have to maintain as cash deposit
with the Reserve Bank of India.
b) RBI may increase the CRR IF there is large amount
of money supply in the economy.
c) RBI will decrease the CRR IF inflation is in control
and the industry needs a monetary boost up. More
money in the hands of industry will boost up
production, consumption and employment.
d) The cash reserve ratio as on 22ndAugust, 2017 is
4%.
a) Statutory Liquidity Ratio is the amount which
commercial banks have to keep it with itself.
b) SLR is also a very powerful tool to control
liquidity in the economy.
c), SLR may be decreased to put more money in
the hands of commercial banks and encourage
industries to boost up their production.
d) An increase in SLR is used as an inflation control
measure to control price rise.
a) The rate at which the RBI borrows money from
the Commercial Banks.
b) An increase in the reverse repo rate = decrease
the money supply and vice-versa.
c) An increase in the Repo Rate and the Reverse
Repo rate indicates strengthening of RBI’s Monetary
Policy.

.
 CHAPTER 16- CAPITAL MARKET INTERMEDIARIES

MERCHANT BANKER
Merchant Banker’ means any person engaged
in the business of issue management
SEBI
• Either by making arrangements regarding NETWORTH (Merchant
selling buying or subscribing to securities or 5 CRORE Bankers)
Regulations,
• Acting as manager/consultant/advisor or 1992
rendering corporate advisory services.

1. MANAGE
PUBLIC ISSUE

2. UNDERWRITING
3. ADVISORY SERVICES
6. International
a) International offering of debt/equity
4. PRIVATE financial advisory
b) Relating to securities market, takeover, etc 5. STOCK BROKING services
PLACEMENT
c) Relating to projects

REGISTRAR AND SHARE TRANFER AGENT

‘Registrar to an Issue’ means the

person appointed by a body
corporate or any person or group SEBI (Registrar to
of persons to carry on the issue and share Category 1 = 50
following activities on its or his or transfer agent) Lakh RS Category 2= 25
their behalf :
Lakh RS
(i) Collecting application for
investor in respect of an issue;

(ii) Keeping a proper record of

applications and monies received
from investors or paid to the
seller of the securities; and
(iii) Assisting body corporate or
person or group of persons in
(a) Determining the basis of
allotment of the securities in
consultation with the stock
exchange;
(b) Finalizing the list of person
entitled to allotment of securities;
(c) Processing and dispatching of
allotment letters, refund orders or
certificates and other related
documents in respect of the issue
PRE-ISSUE ACTIVITES DURING ISSUE POST ISSUE ACTIVITIES
1. Instructing banks for collection 1. Collection and reporting of 1. Data capturing, validation and
of figures and applications. daily collection figures reconciliation.
2. Provide practical inputs for 2. Collection of Data and Form 2. Providing allotment alternatives and
design of bid-cum application from the banks. facilitating listing.
forms.
3. Facilitate and establish 3. Liaising with clients and 3. Uploading data to depositories for
information flow system between intermediaries. crediting securities electronically.
clients, banks, managers
4. Liaison with regulatory 4. Dispatch of refund orders/ share
authorities certificates and reconciliation of refund
payments.
5. Addressing post issue investors
queries
‘Share Transfer Agent’ means:
(i) Any person who on behalf of any body corporate, maintains the records of holders of securities issued
by such body corporate and deals with all matters connected with the transfer and redemption of its
securities;
(ii) The department or division, by whatever name called, of a body corporate performing the activities as
share transfer agents if at any time the total number of holders of its securities issued exceed one lakh.

Don’t worry
UNDERWRITERS
Underwriter means a person who
engages in the business of underwriting
of an issue of securities of a body
corporate. Not less than
SEBI
Underwriting =arrangement whereby (Underwriters 20 lakhs
certain parties assure the issuing Regulation),
company to take up shares, debentures
1993
or other securities to a specified extent
in case the public subscription does not
amount to the expected levels.
Underwriting is compulsory for a public
1) Takes up securities not fully subscribed in a public issue
issue.
2) Makes commitment to get the issue subscribed.
 • Stock-broker means a member of stock STOCK BROKERS AND SUB-BROKERS
exchange
• They are the intermediaries who are allowed SEBI (Stock As specified in
to trade in securities on the exchange of which Brokers & Sub- Schedule VI of
they are members. Brokers) these
Regulations, Regulations.
• They buy and sell on their own behalf as well 1992
as on behalf of their clients.

1) The broker can execute transaction for his client from his own
a/c
2) Has to issue contract note for each transaction- whether he
acted as principal or agent.
3) Obtain consent from client for each transaction.
Helps buyer and seller to
enter in a transaction.

PORTFOLIO MANAGER
“Portfolio manager” means any person who pursuant
• contract or arrangement with the client,
SEBI (Portfolio Not less than
• advises or directs or undertakes on behalf of the Managers) Rs. 2 crores.
client Regulations,
• the management or administration of a portfolio 1993
of securities or the funds of the clients

“Discretionary portfolio manager”

• who exercises or may exercise, “Portfolio”

under a contract relating to means the
portfolio management total holdings
of securities
• any degree of discretion as to belonging to
the investment or the Make aware of the various Responsible for
any person. Decide the best investment
management of the portfolio investment tools available designing customized
plan for an individual as per investment solutions
of the securities or the funds in the market and benefits
his income, age as well as best for the clients
of the client associated with each plan.
ability to undertake risks. according to their
financial needs.

RESEARCH ANALYSTS

“Research analyst” means a person

who is primarily responsible for,-
i)Body corporate/LLP firm-
i. preparation or publication of the SEBI 25 Lakh RS
content of the research report; or (Research ii)Individual or partnership
ii. providing research report; or Analysts) firm having net tangible
Regulations assets of value not less than
iii. making ‘buy/sell/hold’
, 2014 Rs. 1 Lakh.
recommendation; or
iv. giving price target;

v. offering an opinion concerning

public offer, with respect to
securities that are listed or to be
listed in a stock exchange,
Whether or not any such person
has the job title of ‘research
analyst’ and includes any other
entities engaged in issuance of
research report or research
analysis.
a)They are viewed as experts and
important source of information.
Investors rely on their advice.
Study companies and
industries, analyze raw data, b) There are three broad types of analysts,
and make forecasts or viz. sell-side analysts, buy-side analysts
recommendations about and independent analysts.
whether to buy, hold or sell
securities.
 INVESTMENT ADVISER
“Investment Adviser” means any person, who
• for consideration,
• is engaged in the business of providing i) Body Corporate-25
investment advice SEBI
(Investment Lakhs
• to clients or other persons or group of persons Advisers)
and Regulations, ii) Individual/
2013 partnership firm- net
Includes any person who holds out himself as an
investment adviser, by whatever name called. tangible assets<1 lakh

a) Guide clients about financial investments and dealings.

b) Provide service relating to investment management process.

c) Does risk profiling for clients to assess their risks.

CREDIT RATING AGENCY

“Credit rating agency” means
a body corporate which is engaged in, or SEBI (Credit Minimum net
proposes to be engaged in, Rating worth of Rs. 5
Agencies) crores
the business of rating of securities offered by Regulations,
way of public or rights issue. 1999

i) Marketing tool for company and makes investors aware

Extremely important as it
about the debt obligations of the company.
plays a role in investor
protection, benefits ii) Encourages discipline amongst corporate borrowers to
industry by direct improve their financial structure and operating risks to
mobilization of savings obtain a better rating for their debt obligations and
from individuals. thereby lower the cost of borrowing.

DEPOSITORY PARTICIPANT

A DP is an agent of the
depository through which it Depository –
interfaces with the investor Net worth of not less than
SEBI (Deposit- Rs. one hundred crores.
and provides depository
ories and Depository participant
services. Participants) As specified in Regulation
Regulations, 35 to these Regulations
2018

Depository Participant (DP) is

Agent (law) of the depository. Execute pledge requests and off market Handle transmission
They are the intermediaries transfers and on market transfer request requests of investors.
between the depository and of the investors who hold shares in demat Demat/Remat requests also handled in
the investors. form. consultation with RTI/STAs.
 BANKERS TO ISSUE
Banker
a to an Issue means a scheduled bank carrying
on all or any of the following activities:
(i) Acceptance of application and application monies; SEBI (Bankers
(ii) Acceptance of allotment or call monies; to Issue)
Regulations,
(iii) Refund of application monies;
1994
(iv) Payment of dividend or interest warrants.

Furnish prompt information and records

Carries out all the activities of ensuring Collecting the applications for securities along to the company and to the lead manager
that the funds are collected and with their remittance in numerous branches in for monitoring and progressing the issue
different centers. work.
transferred to Escrow accounts.

DEBENTURE TRUSTEES

SEBI Not less than

Debenture Trustee’ means a trustee of
(DEBENTURE 10 Crore
a trust deed for securing any issue of
debentures of a body corporate. TRUSTEE)
REGULATIONS
1993

Call for periodic reports. Exercise due As Ascertain that the

Ensure that property diligence to Inform SEBI
Protecting debentures have
charged to debentures is immediately of
Take possession of trust ensure interest of been converted
adequate and available at any breach of
property and enforce compliance debentures as or redeemed in
trust deed or
security in interest of all times and principle and with the Act, accordance with
soon any breach provision of any
debenture holders interest is free from listing the provisions
of law comes law.
encumbrances agreement, etc into notice.

CUSTODIAN OF SECURITIES
Minimum of
• A custodian is a person who carries on SEBI (Custodian Rs. 50 crores
the business of providing custodial of Securities)
services to the client. Regulations,
1996
• The custodian keeps the custody of
the securities of the client.
• Provides incidental services such as
maintaining the accounts of securities
of the client, collecting the benefits or
rights accruing to the client in respect 1) Administer and protect assets of clients
of securities. 2) Open separate custody and deposit account for
each client.
3) Record assets.
4) Registration of securities.