PCS –OPPORTUNITIES IN CAPITAL MARKET

1

CAPITAL MARKET

• Capital market is a market where buyers and sellers engagein trade of financial securities like shares ,bonds,debentures , etc.

• The buying/selling is undertaken by participants such asindividuals and institutions.

2

TYPES OF CAPITAL MARKET

• Capital market consists of primary markets and secondarymarkets.

• Primary markets deal with trade of new issues of stocksand other securities, whereas secondary market deals withthe exchange of existing or previously-issued securities.

• Another important division in the capital market is madeon the basis of the nature of security traded, i.e. stockmarket and bond market.

3

Few Functions of Capital Market

• Mobilisation of saving… Creating Availability of funds ….

• Linking between investors , savers and industries…

• Help in economic growth…

• Facilitates trading in securities…

4

SECURITIES

• As per 2(h) of Securities Contracts (Regulations) Act, 1956,Securities include-

i) shares, scrips, stocks, bonds, debentures, debenture stock orother marketable securities of a like nature in or of anyincorporated company or other body corporate;

ia) Derivative;

ib) units or any other instrument issued by any collective

investment scheme to the investors in such schemes;

ic) security receipt as defined in clause (zg) of section 2 of the

Securitization and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002;]

id) units or any other such instrument issued to the investors

under any mutual fund scheme;5

Cont…

ii) Government securities;

iia) such other instruments as may be declared by the Central

Government to be securities; and

iii) rights or interest in securities;

• Basically, Securities are Financial instruments issued to raise funds.

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Merchant Bankers

Stock Exchanges

Depository Participants

Registrar & Transfer Agents

Stock Brokers &

Sub-BrokersUnderwriters

Portfolio Managers

Mutual Funds

INTERMEDIARIES IN CAPITAL MARKET

And many Others..

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Why Company Secretary….

• Competence to handle all issues concerning

corporate governance and capital markets in

ensuring compliances.

• Substantial exposure in securities laws and

capital market related matters.

• Acts as a vital link between the company

and its Board of Directors, shareholders and

other stakeholders and regulatory

authorities.

……… 8

PCSOPPORTUNITIES

IN CAPITAL MARKET

9

Cont…

• AUDIT • Advisory

• Certifications • Appearances

SEBI BSE

DEPOSITORIESNSE

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Let’s have detailed look at each areas…

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Opportunities under SEBI To appear as authorised representative before the Securities

Appellate Tribunal .(Since August, 1982 )

Securities Contracts (Regulation) Rules, 1957 [Section 22C, Explanation (b)] (Guideline No. F1/8/SE/ 82 dt. 20.8.1982).

To appear as authorised representative before the Securities Appellate Tribunal .(Since December, 1999)

i. The Securities and Exchange Board of India Act, 1992. [Section 15V, Explanation (b)] ii. Securities Contracts (Regulation) Act, 1956 [Section 22C] iii. The Depositories Act, 1996 [Section 23C, Explanation (b)]

Non Exclusive 12

Cont…

Share Capital Reconciliation Certificate (Since September 2, 2003 )

(Regulation 76 of SEBI (Depositories Participants) Regulations, 2018)

To issue quarterly certificate with regard to reconciliation ofthe total issued capital, listed capital and capital held bydepositories in dematerialized form, details of changes inshare capital during the quarter, and in-principle approvalobtained by the issuer from all the stock exchanges where it islisted in respect of such further issued capital.

Non-exclusive 13

Cont…

Internal Audit of Portfolio Managers (Since November 18, 2003 )

SEBI’s Circular IMD/ PMS/CIR/1/21727/03

Practicing Company Secretary is authorized for conducting theinternal audit of Portfolio Manager. The report is to be submittedtwice a year, as on 31st of March and 30th of September. The scopeof internal audit comprises the checking of compliance of SEBI(Portfolio Managers) Rules, 1993, SEBI (Portfolio Managers)Regulations, 1993 and circulars, notifications or guidelines issued by

SEBI and internal procedures followed by the Portfolio Manager.

Non Exclusive 14

Cont…

Internal Audit of Stock Brokers / Trading Members / Clearing Members. (Since October 21, 2008 )

SEBI’s Circular MRD/ DMS/CIR-29/2008

Practicing Company Secretary is authorized to carry out Internal Audit ofStock Brokers/Trading Members/Clearing Members on a half yearlybasis. The scope of internal audit of stock brokers, being wide enough,covers inter alia the existence, scope and efficiency of the internalcontrol system, compliance with the provisions of the SEBI Act, 1992,Securities Contracts (Regulation) Act, 1956, SEBI (Stock Brokers and SubBrokers) Regulations, 1992, circulars issued by SEBI, agreements, KYCrequirements, Bye Laws of the Exchanges, data security and insurance inrespect of the operations of stock brokers/clearing members.

Non Exclusive 15

Cont…

Internal Audit for Credit Rating Agencies (CRAs). (Since 06th January, 2010 )

SEBI’s Circular SEBI/ MIRSD/CRA/Cir-01/2010

Half yearly audit , Report to be submitted within two months of the half year end.

It shall cover all aspects of CRA operations and procedures, including investor grievance redressal mechanism, compliance with the requirements stipulated in the SEBI Act, Rules and Regulations made thereunder, and guidelines issued by SEBI from time to time.

Non Exclusive16

Cont…

Compliance audit of an investment adviser. (Since January 21, 2013 )

SEBI (Investment Advisers) Regulations, 2013 [Regulation 19(3)]

Yearly audit in order to check the whether Requirements of Regulation 19 of the SEBI (Investment Advisers) Regulations, 2013 are complied with respects to the records to be maintained .

Non Exclusive

17

Cont..

Annual audit of Research analyst or research entity (Since September 1, 2014 )

SEBI (Research Analysts) Regulations, 2014 [Regulation 25(3)]

Yearly audit in order to check the whether Requirements of SEBI (Research Analysts) Regulations, 2014 are complied with respects to the records to be maintained .

Non Exclusive

18

Cont..

Certificate regarding Transfer of Securities (Since September 2, 2015 )

Regulation 40 (9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To certify that all certificates have been issued within thirty days of the date of lodgement for transfer, sub-division, consolidation, renewal, exchange or endorsement of calls /allotment services.

Exclusive

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Cont…

Certificate towards maintenance of Asset Cover (Since September 2, 2015 )

Regulation 56(1)(d) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To issue half yearly certificate regarding maintenance of hundred percent asset cover in respect of listed non-convertible debt securities along with the half yearly financial results.

Non Exclusive

20

Cont…

Certificate towards Qualification of Directors (Since September 2, 2015 )

Schedule V, Part C of Clause (10)(i) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To certify that none of the directors on the board of the company have been debarred or disqualified from being appointed or continuing as directors of companies by SEBI/Ministry of Corporate Affairs or any such statutory authority.

Exclusive

21

Cont..

Certificate towards Corporate Governance (SinceSeptember 2, 2015)

Schedule V, Clause E of SEBI of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To issue Compliance Certificate regarding compliance of conditions ofcorporate Governance.

Non Exclusive

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Cont…

Internal Audit of Registrar and Share Transfer Agent (RTA) (Since April 20 , 2018)

SEBI’s Circular SEBI/HO/ MIRSD/CIR/P/2018/73

Yearly Audit

The audit shall cover all aspects of RTA operations including investor grievance redressal mechanism and compliance with the requirements stipulated in the SEBI Act, Rules and Regulations made thereunder, and guidelines/circulars Issued by SEBI from time to time. The scope of the audit shall cover all issues concerning the functioning of RTAs.

Non Exclusive 23

Cont…

Secretarial Audit (Since May 9, 2018 )

(Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To conduct Secretarial Audit of every listed entity and its material unlisted subsidiaries incorporated in India.

Exclusive

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Cont…

Annual Secretarial Compliance Report (Since February 8, 2019 )

SEBI’s Circular CIR/CFD/CMD1/27/2019

To provide Annual Secretarial Compliance Report to all the listed entities on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder.

Exclusive

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Opportunities…. BSE

Following are the few Certificates which can be issued by the Practicing Company Secretary

Certificate at the time of listing of shares at the time of IPO/FPO withrespect to the allotment of shares.

Certificate towards compliance of Chapter V of SEBI (Issue of Capitaland Disclosure Requirements) Regulations, 2018, Companies Act, 2013including Section 42 and Section 62 of the Companies Act 2013 and Rule14 of the Companies (Prospectus and Allotment of Securities) Rules,2014 at the time of issue of shares on preferential basis.

Certificate towards receipt of money specifically certifying that thecompany has received the application/allotment monies from theapplicants in case of issue of shares under ESOP scheme required to beissued at the time of listing of ESOP shares.

Non Exclusive 26

Cont…

Certificate to the effect that the SEBI (ICDR) Regulations, 2018 for bonus issue has been complied with at the time of listing of bonus shares issued.

Certificate confirming the floor price (with calculations) and receipt of funds pursuant to QIP issue.

Certificate towards for compliance with Corporate Governancerequirements in accordance with (Regulation 17, 18, 19, 20, 21, 22,23, 24, 25, 26, 27) of the (SEBI (Listing Obligation and Disclosurerequirement) Regulation, 2015) at the time of Direct listing ofCompany on BSE which is listed on other nationwide stock exchange.

Non Exclusive27

Cont ….

Certificates at the time of SME IPO

Compliance of conditions of Corporate Governance as stipulated inCompanies Act, 2013 and Regulation 17 to 27 of the SEBI (LODR)Regulations and circulars issued by SEBI thereunder.

Certificate at the time of listing of shares at the time of IPO/FPOwith respect to the allotment of shares.

Non Exclusive

28

Cont…

Net worth Certificate

To issue Net worth Certificate to be submitted by all active members including representative members of Cash segment, Limited Trading members & Trading and/or Clearing members of the Derivatives segment of the Bombay Stock Exchange.

Non Exclusive

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Opportunities…. NSE

Certificate for application of change of name certifying therequirements for change of name as mentioned in Regulation 45 of theSEBI (Listing Obligations and Disclosure Requirements)Regulations,2015.

Certificate post allotment Certificate from stating that

• Allotment has been made as per the basis of allotment approved bythe Designated Stock Exchange.

• Securities under lock-in (the certificate should include the distinctivenumbers of securities under lock-in and date from and upto which theseshares are under lock-in).

Certificate to the effect that the SEBI (ICDR) Regulations, 2018 for bonusissue has been complied with at the time of listing of bonus sharesissued.

Non Exclusive30

Cont…

Certificate towards confirmation of pre-preferential allotment holding of the allottees in case of preferential allotment and shares allotted in case of preferential allotment.

Non Exclusive

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Opportunities …Depositories

Internal Audit of operations of the Depository Participants (Since March, 1999 )

NSDL Byelaws 10.3.1

To conduct Internal Audit of operations of the Depository Participants, at intervals of not more than six months and furnish a copy of the internal audit report to the depository.

The scope of such audit shall cover the existence, scope and efficiencyof the internal control system, compliance with the provisions of theAct, Securities and Exchange Board of India (Depositories andParticipants) Regulations,1996, Bye Laws, Business Rules, agreementand systems security in the office of the Participant in respect of theoperations of the Depository

Non Exclusive32

Cont…

Internal Audit of operations of the Depository Participants (Since September, 1999 )

CDSL Byelaws 16.3.1

To conduct Internal Audit of operations of the DepositoryParticipants at such intervals as may be specified by CDSL from timeto time and furnish a copy of the internal audit report to CDSL.

The scope of such audit shall cover the existence, scope andefficiency of the internal control system, compliance with theprovisions of the Act, the Regulations, these Bye Laws, OperatingInstructions, agreements and systems security and insurance in theoffice of the participant in respect of the operations of CDSL

Non Exclusive 33

Cont…

Concurrent audit of Depository Participants Non-exclusive

To carry out concurrent audit of Depository Participants which covers

audit of the process of demat account opening, control and verification of Delivery Instruction Slips (DIS).

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NSDL CDSL

Date of Recognition June 24, 2006 July 11, 2006

Enforcing Regulation NSDL/Policy/2006/0021

CDSL/AUDIT/DP/721

Cont…

Networth Certificate Non-exclusive

Networth Certificate to be submitted by the issuers at the time of admitting securities to the depositories

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CDSL NSDL

Date of Recognition December 17, 2019 January 2, 2020

Enforcing Regulation CDSL Letter No. CDSL/ADM/RK/2019/0853

NSDL Letter No. NSDL/II/MISC/DG/246/2020

Advisory Services

A Company Secretary having knowledge of various laws andregulations and recognitions under them, can advise andconsult in below fields:-

Capital Raising

Corporate Restructuring

Capital Restructuring

Business Deals and Valuations

Corporate Governance

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Opportunities Vis-a-vis Responsibilities… Knowledge Updation

Proper study & Planning of assignment

Commitment

Follow Ethics

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Opportunities Vis-à-vis Challenges

Assess to the Management

Approach to the management

Availability of Data

Knowledge of the Concepts

Value Addition

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