Solved Scanner Appendix - Shuchita · Companies seeking listing on BSE SME platform through IPO are required ... Solved Scanner Appendix CSEP M ... retail investors would be permitted

SolvedScanner Appendix

CS Executive Programme Module - II

(New Syllabus)(Solution of June - 2015)

Paper - 6 : Capital Markets and Securities Laws

Chapter - 1 : Overview of Capital Market2015 - June [2] (d)The statement that “All securities in the same class are identical andinterchangeable” is concerned to one of the key features of the DepositorySystem in India.The securities held in dematerialized form do not bear any notable featurelike distinctive number, folio number or certificate number. Once shares getdematerialized, they lose their identity in terms of share certificate, distinctivenumbers and folio numbers. Thus all securities in the same class areidentical and interchangeable. For example, all equity shares in the class offully paid up shares are interchangeable.

Chapter - 2 : Capital Market Instruments2015 - June [2A] (Or) (i)A private equity fund, like a hedge fund, is an unregistered investmentvehicle in which investors pool money to invest. Private equity fundsconcentrate their investments in unregistered (and typically illiquid)securities. Like hedge funds, private equity funds also rely on the exemptionfrom registration of the offer and sale of their securities.The investors in private equity funds and hedge funds typically include highnet worth individuals and families, pension funds, endowments, banks andinsurance companies. Private equity funds, however, differ from hedge fundsin terms of the manner in which contribution to the investment pool is madeby the investors. Private equity investors typically commit to invest a certainamount of money with the fund over the life of the fund and make their

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Solved Scanner Appendix CSEP M - II Paper - 6 (New Syllabus) 2

contributions in response to “capital calls” from the fund’s general partner.Private equity funds are long term investments, provide for liquidation at theend of the term specified in the fund’s governing documents and offer little,if any, opportunities for investors to redeem their investments. A privateequity fund may distribute cash to its investors when it sells its portfolioinvestment, or it may distribute the securities of a portfolio company.2015 - June [3] (c)

(i) Meaning of “Differential Voting Rights” (DVR) [Sec. 43 (a) (ii) ofCompanies Act, 2013]: A DVR share is like an ordinary equity share,but it provides favour voting rights to the shareholder. The differencein voting rights can be achieved by reducing the degree of votingpower. It is ideal for long term investors, typically small investors whoseek higher dividend and are not necessarily interested in taking avoting position.

(ii) Conditions for Issue of DVR:As per Rule 4 of the Companies (Share Capital and Debentures)Rules, 2014, a company limited by shares can issue equity shares withdifferential rights as to dividend, voting or otherwise, by complyingthese following conditions:(a) the articles of association of the company authorizes the issue of

shares with differential rights;(b) the issue of shares is authorized by an ordinary resolution passed

at a general meeting of the shareholders. However, where theequity shares of a company are listed on a recognized stockexchange, the issue of such shares shall be approved by theshareholders through postal ballot;

(c) the shares with differential rights shall not exceed 26% of the totalpost-issue paid up equity share capital including equity shares withdifferential rights issued at any point of time;

(d) the company having consistent track record of distributable profitsfor the last 3 years.

(e) the company has not defaulted in filing financial statements andannual returns for 3 financial years immediately preceding thefinancial year in which it is decided to issue such shares;


(f) the company has no subsisting default in the payment of adeclared dividend to its shareholders or repayment of its matureddeposits or redemption of its preference shares or debentures thathave become due for redemption or payment of interest on suchdeposits or debentures or payment of dividend.

(g) the company has not defaulted in payment of the dividend onpreference shares or repayment of any term loan from a publicfinancial institution or State level financial institution or scheduledBank that has become repayable or interest payable thereon ordues with respect to statutory payments relating to its employeesto any authority or default in crediting the amount in InvestorEducation and Protection Fund to the Central Government;

(h) the company has not been penalized by Court or Tribunal duringthe last 3 years of any offence under the:

C Reserve Bank of Indian Act, 1934C The Securities and Exchange Board of India Act, 1992 • The Securities Contracts Regulation Act, 1956C The Foreign Exchange Management Act, 1999 or C Any other special Act, under which such companies being

regulated by sectoral regulators.2015 - June [4] (a) (i), (iii) (i)

BOD Debt Market Equity market

Meaning Debt markets are marketsfor the issuance, tradingand settlement of varioustypes and features of fixedincome securities.

Equity markets arem a rke ts f o r t h eissuance, trading andsettlement of varioustypes of shares.

Issued by Fixed income securitiescan be issued by any legalentity like central and stategovernments, publ icb o d i e s , s t a t u t o r y

Shares can be issuedby any companyincluding Governmentcompany.


corporations, banks andinstitutions and corporatebodies.

Risk Debt market instrumentsa r e l e s s r i s k y i ncomparison to equitymarket instruments.

E q u i t y m a r k e tinstruments are morerisky in comparison tod e b t m a r k e tinstruments.

Regulated by RBI SEBI

(iii) (1) Partly Convertible Debentures: These may consist of two kindsnamely- convertible and non - convertible. The convertible portion isto be converted into equity shares at the expiry of specified period.However, the non convertible portion is redeemed at the expiry ofthe stipulated period. If the conversion takes place at or after 18months, the conversion is optional at the discretion of the debentureholder.

(2) Non - Convertible Debentures: These debentures do not carry theoption of conversion into equity shares and are therefore redeemedon the expiry of the specified period or periods.

Chapter - 3 : Credit Rating and IPO Grading2015 - June [2] (a)Credit rating in general sense is the evaluation of the credit worthiness of anindividual or of a business based on relevant factors indicating ability andwillingness to pay obligations as well as net worth. Credit rating establishesa link between risk and return. An investor or any other interested personuses the rating to assess the risk level and compares the offered rate ofreturn with his expected rate of return. Credit rating is extremely important asit not only plays a role in investor protection but also benefits industry as awhole in terms of direct mobilization of savings from individuals.


Chapter - 4 : Securities Market Intermediaries2015 - June [2A] (Or) (iii)• “Investment Adviser” means any person, who for consideration, is

engaged in the business of providing investment advice to clients or otherpersons or group of persons and includes any person who holds outhimself as an investment adviser, by whatever name called.

• “Investment advice” means advice relating to investing in, purchasing,selling or otherwise dealing in securities or investment products, andadvice on investment portfolio containing securities or investmentproducts, whether written, oral or through any other means ofcommunication for the benefit of the client and shall include financialplanning:

• However, investment advice given through newspaper, magazines, anyelectronic or broadcasting or telecommunications medium, which iswidely available to the public shall not be considered as investmentadvice for the purpose of these regulations.

Chapter - 5 : Market Infrastructure Institutions - Stock ExchangeTrading Mechanism

2015 - June [2] (c)Companies seeking listing on BSE SME platform through IPO are requiredto comply with the quantitative eligibility norms as prescribed by BSE.Additionally, it will be desirable for the company to file a compliancecertificate by a practicing company secretary as per the guidance noteissued by the Institute of Company Secretaries of India as and when such acertification is made applicable by the SME platform of BSE Ltd.2015 - June [2A] (Or) (ii)

(I) Meaning of Short Selling: It means selling a stock which the sellerdoesn’t own at the time of trade.

(II) Broad Frame work of Short Selling : (a) Short selling is permissible for all classes of investors i.e. retails as

well as institutional investors. (b) Naked short selling shall not be permitted in the Indian securities

market and accordingly, all investors would be required tomandatory honour their obligation of delivering securities at thetime of settlement.


(c) No institutional investor shall be allowed to do day trading i.e.square – of their transactions intra day.

(d) A scheme for securities lending & borrowing shall be put in placeto provide the necessary impetus to short sell.

(e) SEBI may review the list of stocks that are eligible for short sellingtransactions from time to time.

(f) The institutional investors shall disclose upfront at the time ofplacement of order whether the transaction is a short sell.However, retail investors would be permitted to make a similardisclosure by the end of trading hours on the transaction day.

(g) The brokers shall be mandated to collect the details on scrip-wiseshort sell positions collate the data and upload it to the stockexchanges before the commencement of trading on the followingtrading day. The stock exchanges shall then consolidate suchinformation and disseminate the same on their websites for theinformation of the public on a weekly basis.

(h) The frequency of such disclosure may be reviewed from time totime with the approval of SEBI.

2015 - June [3] (a), (b)(a) (I) Meaning of Market Making:

Market making is a process whereby two way quotes are offered forthe purpose of facilitating trading in respect of certain scrips.Market-making is aimed at infusing liquidity in securities that are notfrequently traded on stock exchanges. It adds liquidity to scrips, forwhich market making is being done. The main advantage of marketmaking is that it affords much needed liquidity to the securities. Italso increases the supply of scrips in the market and also triggersdemand for the scrips in the market.

(II) Obligations of Market Maker: The person(s) who offers the facility of market making is known as‘Market Maker’. Following are the obligations of market maker: (i) A market-maker is responsible for enhancing the demand supply

situation in securities such as stocks and futures & options(F&O).


(ii) A market-maker usually is responsible for enhancing activity ina few chosen securities. In the process, the market-makerprovides both a buy and a sell quote for his chosen securities.He profits from the spread between buy and sell quotes. Forexample, if the market-maker gives a bid-ask quote of ̀ 505-500(which means the market - maker will buy from the market at ` 500 and sell at ` 505), then the profit is ` 5. For illiquidsecurities, the profit spreads are usually higher (within aregulator-prescribed band) because of the higher risk taken bythe market-maker.

(iii) Market-makers are obligated to buy or sell the security at a priceand size they have quoted.

(iv) One may wonder the role of a market-maker in the computerised system, as investors can transact directly without a third party.The market-maker’s role here is to ensure supply of stocks atany given point in time. Market-makers are helpful as they arealways ready to buy or sell as long as investors are willing to paythe price quoted by them.

(b) (I) Meaning of Demutualization: It means a process of conversion of a stock - exchange from a“Mutually Owned” association to a company “Owned byshareholders”. Simply, in demutualization, there is change intolegal-structure of an exchange i.e. from a mutual form to abusiness-corporation form.

(II) Purpose of Demutualization: The purposes of demutualisation areas follows:(i) Stock exchanges owned by members tend to work towards the

interest of members alone, which could on occasion bedetrimental to rights of other stakeholders. Division of ownershipbetween members and outsiders can lead to a balancedapproach, remove conflicts of interest, create greatermanagement accountability.

(ii) Publicly owned stock exchanges can enter into capital market forexpansion of business.

(iii) Publicly owned stock exchange would be more professionallymanaged than broker owned.

(iv) Demutualisation enhances the flexibility of management.


2015 - June [4] (a) (ii), (b) (ii)(a) (ii) (1) Listed cleared Securities: The securities of companies, which

have signed the listing agreement with a stock exchange, aretraded as “Listed Securities” in that exchange. The securitiesadmitted for dealing on stock exchange after complying with allthe listing requirements and displayed by the Board on the listof cleared securities.

(2) Permitted Securities: To facilitate the market participants totrade in securities of such companies, which are actively tradedat other stock exchanges but are not listed on an exchange,trading in such securities is facilitated as “permitted securities”provided they meet the relevant norms specified by the stockexchange.

(b) (ii) (a) Meaning:(i) STP i.e., straight through processing is a mechanism, that

automates the end to end processing of transactions offinancial instruments.

(ii) It electronically captures & process the transactions from, order origination point to final settlement.

(iii) Simply, STP streamlines the process of trade executionand settlement and avoids manual entry and re–entry ofthe details of the, same trade by different marketintermediaries and participants.

(b) Regulatory provision: STP service is regulated by SEBI (STPCentralized Hub and STP Service Providers) Guidelines, 2004.

(c) Advantages: STP System offers following benefits:(i) Minimization in human errors, while entering or re– entering

the details, because it automates the processing;(ii) Shorter settlement cycle i.e.(T +1)(iii) Greater transparency with clear audit trail;(iv) Timely settlement of trades & instructions;(v) Reduction in brokerage charges etc.


Chapter - 7 : Money Market2015 - June [1] (c)

(I) Meaning: Factoring is a financial transaction where an entity sells itsreceivables to a third party called a ‘factor’, at discounted prices.Factoring is a financial option for the management of receivables. Insimple definition it is the conversion of credit sales into cash. Infactoring, a financial institution (factor) buys the accounts receivableof a company (Client) and pays up to 80%(rarely up to 90%) of theamount immediately on formation of agreement. Factoring companypays the remaining amount (Balance 20%-finance cost-operating cost)to the client when the customer pays the debt. Collection of debt fromthe customer is done either by the factor or the client depending uponthe type of factoring. The account receivable in factoring can either befor a product or service.

(II) Advantages of Factoring: (a) Seller gets funds immediately after the sale is effected and on

presentation of accepted sales invoices and Promissory notes.(b) Major part of paper work and correspondence is taken care of by

the factor.(c) Follow-up, for recovery of funds, is done mainly by the factor.(d) Interest rates are not as high as normal discounting.(e) Increased cash flow to meet payroll.(f) Immediate funding arrangements.(g) No additional debt is incurred on balance sheet.(h) Other assets are not encumbered.(i) Approval is not based on seller’s credit rating.

2015 - June [2] (b)Treasury Bills are money market instruments to finance the short termrequirements of the Government of India. These are discounted securitiesand thus are issued at a discount to face value. The return to the investor isthe difference between the maturity value and issue price. In the short term,the lowest risk category instruments are the treasury bills. Features of Treasury Bills: (a) The treasury bills are issued in the form of promissory note in physical

form or 'by credit to Subsidiary General Ledger (SGL) account or Giltaccount in dematerialized form.


(b) Bids for Treasury bill are to be made for a minimum amount of ̀ 25,000/-only and in multiples thereof.

(c) All entities registered in India like Banks, Financial Institutions, PrimaryDealers', Firms, Companies, Corporate Bodies, Partnership Firms,Institutions, Mutual Funds, Foreign Institutional Investors, StateGovernments, Provident Funds Trusts, Research Organizations, NepalRashtra bank and even individuals are eligible to bid and purchaseTreasury bills.

(d) The treasury bills are repaid at par on the expiry of their tenure at theoffice of the Reserve Bank of India.

(e) All the treasury Bills are highly liquid instruments available both in theprimary and secondary market.

(f) For treasury bills the day count is taken as 365 days for a year. (g) The yield of a Treasury bill is calculated as per the following formula:

Y =

Here Y = Discounted yield P = Price D = Days to maturity

Chapter - 8 : Mutual Funds2015 - June [1] (a), (b)(a) Given,

NAV = ` 12Redemption price = ` 11.65Offer Price = ` 12.50(i) Front-end Load:

We know,

Offer Price =

` 12.50 =

Or, 1 - Front End Load = = 0.96

Front end load charges = 1 - 0.96 = 0.04 or 4%


(ii) Back- end LoadWe know,

Redemption Price =

` 11.65 =

Or, 1 + Back End Load = = 1.03

Back end load charges = 1.03 - 1.00 = 0.03 or 3%

(b) In case of mutual fund, the value of right shares can be calculated byfollowing the below mentioned formula i.e.

Vr = ...................................... (1)

WhereVr = Value of rightn = Number of right shares offered = ` 2500m = Number of original shares held = ` 1,000Pex = Ex-right Price = ` 18Pof = Rights offer price = `15Now, if we put these values in equation(1)

Vr =

= ` 7.52015 - June [4] (b)

(i) “Infrastructure debt fund scheme” means a mutual fund schemethat invests primarily (minimum 90% of scheme assets) in the debtsecurities or securitized debt instrument of infrastructure companiesor infrastructure capital companies or infrastructure projects or specialpurpose vehicles which are created for the purpose of facilitating orpromoting investment in infrastructure and other permissible assets inaccordance with these regulations or bank loans in respect ofcompleted and revenue generating projects of infrastructurecompanies or projects or special purpose vehicles.


Chapter - 10 : Collective Investment Schemes2015 - June [2] (e)A collective investment scheme is a trust based scheme that comprises apool of assets that is managed by a collective investment scheme managerand is governed by the Collective Investment Schemes Regulations given bySEBI. Collective Investment Schemes (CIS) are a popular form of investmentand they are accessible to all. Each investor has a proportional stake in theCIS portfolio based on how much money he or she contributed. The word‘unit’ refers to the portion or part of the CIS portfolio that is owned by theinvestor. The ‘trust’ is the financial instrument that is created in order tomanage the investment. The trust enables financial experts to invest themoney on behalf of the CIS investor. Collective Investment Schemes providea relatively secure means of investing on the Stock Exchange and otherfinancial instruments. The sums of money that are exchanged on the StockExchange and in the Money Markets make them too pricey for most people.With a CIS, the money or funds from a group of investors are pooled orcollected together to form a CIS portfolio.

Chapter - 15 : Depositories2015 - June [5] (c)National Securities Depository Limited vide its Circular No. NSDL/POLICY/2006/0021 dated June 24, 2006 provides for concurrent audit of theDepository Participants. The Circular provides that w.e.f. August 1, 2006, theprocess of demat account opening, control and verification of DeliveryInstruction Slips (DIS) is subject to Concurrent Audit. Depository Participantshave been advised to appoint a firm of qualified Chartered Accountant(s) orCompany Secretary(ies) holding a certificate of practice for conducting theConcurrent Audit. However, the participants in case they so desire, mayentrust the Concurrent Audit to their Internal Auditors.In respect of account opening, the auditor should verify all the documentsincluding KYC documents furnished by the Clients and verified by theofficials of the Participants. The scope of Concurrent Audit with respect tocontrol and verification of DIS cover the areas given below:


(I) Issuance of DIS: The procedure followed by the Participants with respect to:

(a) Issuance of DIS booklets including loose slips.(b) Existence of controls on DIS issued to Clients including

pre-stamping of Client ID and unique preprinted serial numbers.(c) Record maintenance for issuance of DIS booklets (including

loose slips) in the back office.(II) Verification of DIS:

The procedure followed by the Participants with respect to:(a) Date and time stamping (including late stamping) on instruction

slips.(b) Blocking of used/reported lost/stolen instruction slips in back

office system/ manual record(c) Blocking of slips in the back office system/manual record which

are executed in DPM directly.(d) Two step verification for a transaction for more than ` 5 lakh,

especially in case of off-market transactions.(e) Instructions received from dormant accounts.

The Concurrent Auditor should conduct the audit in respect of all accountsopened, DIS issued and controls on DIS as mentioned above, during theday, by the next working day. In case the audit could not be completed withinthe next working day due to large volume, the auditor should ensure that theaudit is completed within a week’s time.Any deviation and/or non-compliance observed in the aforesaid areas shouldbe mentioned in the audit report of the Concurrent Auditor. The Managementof the Participant should comment on the observations made by theConcurrent Auditor. The Concurrent Audit Report should be submitted toNSDL, on a quarterly basis, in a hard copy form. If the Auditor for Internaland Concurrent Audit is the same, consolidated report may be submitted.2015 - June [6] (a)Dematerialisation and Immobilisation are distinct activities. Dematerialisationis the process by which shares in the physical/ paper form are cancelled andcredits in the form of electronic balances are maintained on highly securesystem at the depository.


Immobilisation of securities, on the other hand, occurs when physicalsecurity certificates are stored or lodged with depository for safe custody. Allsubsequent transaction in these securities take place in book – entry form.The actual owner has the right to withdraw their physical securities as andwhen desired. The immobilization of fresh issue may be achieved by issuinga jumbo certificate representing the entire issue in the name of depository,as nominee of the beneficial owners.2015 - June [6A] (Or) (i) (a) Regulation 55A of SEBI (Depositories and Participants) Regulations,

1996 provides that every issuer shall submit audit report on a quarterlybasis to the concerned stock exchanges audited by C a practicing Company Secretary or C a qualified Chartered Accountant, For the purposes of reconciliation of the total issued capital, listed capitaland capital held by depositories in dematerialized form, the details ofchanges in share capital during the quarter and the in-principle approvalobtained by the issuer from all the stock exchanges where it is listed inrespect of such further issued capital.

(b) The audit report is required to give the updated status of the register ofmembers of the issuer and confirm that securities have beendematerialized as per requests within 21 days from the date of receiptof requests by the issuer and where the dematerialization has not beeneffected within the said stipulated period, the report would disclose thereasons for such delay.

(c) The issuer is under an obligation to immediately bring to the notice of thedepositories and the stock exchanges, any difference observed in itsissued, listed and the capital held by depositories in dematerialized form.

Chapter - 16: Listing and Delisting of Securities2015 - June [6] (c) In following cases delisting is not permissible as per SEBI (Delisting of EquityShares) Regulations, 2009: (a) Buy back of equity shares by the company; or(b) Preferential allotment made by the company; or


(c) Unless a period of three years has elapsed since the listing of that classof equity shares; or

(d) Instruments which are convertible into the same class of equity sharesthat are sought to be delisted are outstanding.

(e) Delisting of convertible securities. (f) No promoter shall directly or indirectly employ the funds of the company

to finance an exit opportunity or an acquisition of shares made pursuantto provided under these regulation.

(g) Employ any device, scheme or artifice to defraud any shareholder orother person; or

(h) Engage in any transaction or practice that operates as a fraud or deceitupon any shareholder or other person; or

(i) Engage in any act or practice that is fraudulent, deceptive ormanipulative in connection with such delisting.

2015 - June [6A] (Or) (ii) (a) Clause 49(XI) of listing agreement deals with compliance certificate on

Corporate Governance.(b) The practicing Company Secretaries have also been recognised to issue

Certificate of Compliance of Conditions of Corporate Governance. Theclause provides that the company shall obtain a certificate from eitherthe auditors or practicing company secretaries regarding compliance ofconditions of corporate governance as stipulated in this clause andannex the certificate with the directors’ report, which is sent annually toall the shareholders of the company.

(c) The same certificate shall also be sent to the Stock Exchanges alongwith the annual report filed by the company.

2015 - June [6A] (Or) (v) As per Clause 49 of the listing agreement, following are the requirements forthe ‘Whistle Blower Policy’ in a listed company: 1. The company shall establish a vigil mechanism for directors and

employees to report concerns about unethical behaviour, actual orsuspected fraud or violation of the company’s code of conduct or ethicspolicy.


2. This mechanism should also provide for adequate safeguards againstvictimization of director(s) / employee(s) who avail of the mechanism andalso provide for direct access to the Chairman of the Audit Committeein exceptional cases.

3. The details of establishment of such mechanism shall be disclosed bythe company on its website and in the Board’s report.

Chapter - 17: Issue of Securities2015 - June [5] (b)(I) Meaning:

Reservation on competitive basis means reservation wherein specifiedsecurities are allotted in portion of the number of specified securitiesapplied for in respect of a particular reserved category to the number ofspecified securities reserved for that category.

(II) Eligible Persons: According to SEBI (ICDR) Regulations, 2009, there are certain personseligible for reservation on competitive basis in case of an issue madethrough the book building process, which are as: (a) employees, in case of new issuer, persons who are in the

permanent and full time employment of the promoting companiesexcluding the promoters and an immediate relative of the promoterof such companies.

(b) shareholders (other than promoters) of:(i) listed promoting companies, in case of a new issuer; and(ii) listed group companies, in case of an existing issuer:However, if the promoting companies are designated financialinstitutions or state and central financial institutions, theshareholders of such promoting companies shall not be eligible forthe reservation on competitive basis;

(c) persons who, as on the date of filing the draft offer document withSEBI, are associated with the issuer as depositors, bondholders orsubscribers to services of the issuer making an initial public offer.However, the issuer shall not make the reservation to the issuemanagement team, syndicate members, their promoters, directorsand employees and for the group or associate companies of theissue management team and syndicate members and theirpromoters, directors and employees.


Chapter - 18 : Regulatory Framework Relating to Securities Market Intermediaries

2015 - June [6] (e) “Institutional Placement Programme” means a further public offer of eligiblesecurities by an eligible seller, in which the offer, allocation and allotment ofsuch securities is made only to qualified institutional buyers in terms ofChapter VIII-A of the SEBI(ICDR) Regulations, 2009.The provisions of this Chapter shall apply to issuance of fresh shares and oroffer for sale of shares in a listed issuer for the purpose of achievingminimum public shareholding in terms of Rule 19(2)(b) and 19A of theSecurities Contracts (Regulation) Rules, 1957. Following are important pointsin this regard:(I) Conditions for Institutional Placement Programme:

(a) An institutional placement programme may be made only after aspecial resolution approving the institutional placement programmehas been passed by the shareholders of the issuer in terms ofsection 62 of the Companies Act, 2013.

(b) No partly paid-up securities shall be offered.(c) The issuer shall obtain an in-principle approval from the stock

exchange(s).(II) Appointment of Merchant Banker

An institutional placement programme shall be managed by merchant banker(s) registered with the Board who shall exercise due diligence.So, the given statement i.e. “An institutional placement programme shallbe managed by merchant banker(s) registered with SEBI” is correct.

Chapter - 19 : Insider Trading - An Overview 2015 - June [6] (b)The given statement that “Price sensitive information is any informationwhich relates directly or indirectly to a company” is absolutely correct. As perSEBI(Prohibition of Insider Trading) Regulation, 2015 , “Unpublished pricesensitive information” means any information, relating to a company or itssecurities, directly or indirectly, that is not generally available which uponbecoming generally available, is likely to materially affect the price of thesecurities and shall, ordinarily including but not restricted to, informationrelating to the following:


(i) financial results;(ii) dividends;(iii) change in capital structure;(iv) mergers, de-mergers, acquisitions, delistings, 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.

2015 - June [6A] (Or) (iv)(I) Meaning of Insider Trading : It means buying or selling or dealing in

the Securities of a listed company by a director, officer and employeeof the firm or by any other person such as internal auditor, statutoryauditor, agent, adviser analyst etc. who has knowledge of unpublishedprice sensitive information”.

(II) Definition of relative: SEBI (Insider Trading) Regulation 2015 refers the definitions of “Relative” as per Companies Act, 2013. As per Sec.2(77) of Companies Act, relative means any person, who is related toanother, if (i) they are members or a HUF.(ii) they are husband and wife; or (iii) one person is related to the other, as per Rule 4 of the Companies

(Specification of Definitions Details) Rules, 2014.

Chapter - 20 : Takeover Code - An Overview2015 - June [5] (a)In this case ‘kind Enterprises Ltd.’ is an acquirer, which obligations as perSEBI(Substantial Acquisition of shares and Takeovers) regulations, 2011 areas:(1) Prior to making the public announcement of an open offer for acquiring

shares under these regulations, the acquirer shall ensure that firmfinancial arrangements have been made for fulfilling the paymentobligations under the open offer and that the acquirer is able toimplement the open offer, subject to any statutory approvals for the openoffer that may be necessary.


(2) In the event the acquirer has not declared an intention in the detailedpublic statement and the letter of offer to alienate any material assetsof the target company or of any of its subsidiaries whether by way ofsale, lease, encumbrance or otherwise outside the ordinary course ofbusiness, the acquirer, where he has acquired control over the targetcompany, shall be debarred from causing such alienation for a period oftwo years after the offer period:Provided that in the event the target company or any of its subsidiariesis required to so alienate assets despite the intention to alienate nothaving been expressed by the acquirer, such alienation shall require aspecial resolution passed by shareholders of the target company, by wayof a postal ballot and the notice for such postal ballot shall inter aliacontain reasons as to why such alienation is necessary.

(3) The acquirer shall ensure that the contents of the public announcement,the detailed public statement, the letter of offer and the post-offeradvertisement are true, fair and adequate in all material aspects and notmisleading in any material particular and are based on reliable sourcesand state the source wherever necessary.

(4) The acquirer and persons acting in concert with him shall not sell sharesof the target company held by them, during the offer period.

(5) The acquirer and persons acting in concert with him shall be jointly andseverally responsible for fulfillment of applicable obligations under theseregulations.

2015 - June [6] (d)Disclosures In SEBI Takeover Regulations 2011, the obligation to give the disclosures onthe acquisition of certain limits is only on the acquirer and not on the TargetCompany. Further as against the Open Offer obligations where the individualshareholding is also to be considered, the disclosure shall be of theaggregated shareholding and voting rights of the acquirer or promoter of thetarget company or every person acting in concert with him.


RegulationsNo.

TriggeringPoint

To and by whom Time Period

EVENT BASED DISCLOSURES

29(1) Acquisition of5% or mores h a r e s o rvoting rights

To the TargetCompany and Stock Exchange by the Acquirer

Within 2 working days of:(a) Receipt of intimation

of allotment of shares;or

(b) The acquisition ofshares or voting rights

29(2) Acquirer a l ready holding 5% ormore shares orvoting rights,on acquisition/disposal of 2%or more sharesor voting rights.

To the TargetCompany andStock Exchange bythe Acquirer /Seller

Within 2 working days ofsuch acquisition

CONTINUAL DISCLOSURES

30(1) Any person holding 25% ormore shares or voting rights

Target Company &Stock Exchange bysuch person

Within 7 working daysfrom the end of endfinancial year

30(2) Promoters/Person havingcontrol over the TargetCompany

Target Company &StockE x c ha ng e b yPromoter

Within 7 working daysfrom the end of eachfinancial year.

DISCLOSURE OF PLEDGED/ENCUMBERED SHARES

31(1) On the encumbrance ofshares by the promoter orperson acting Concert withhim

Target Company&StockExchange by thePromoter

Within 7 working daysfrom the date ofc r e a t i o n o fencumbrance


32(2) On the invocation of orrelease of such encum-brance by the Promoter

Target Company &Stock Exchange bythe Promoter

Within 7 working daysfrom the date in-v o c a t i o n o fencumbrance.

Chapter - 21 : Investor Protection2015 - June [6A] (Or) (iii)(I) About SCORES:

C SCORES stands for ‘SEBI Complaints Redress System of SEBI. C It is a web based centralized grievance redress system of SEBI

(http://scores.gov.in). C SCORES enables investors to lodge and follow up their complaints

and track the status of redressal of such complaints online from theabove website from anywhere.

C This enables the market intermediaries and listed companies toreceive the complaints online from investors, redress suchcomplaints and report redressal online.

C All the activities starting from lodging of a complaint till its closure bySEBI would be online in an automated environment and thecomplainant can view the status of his complaint online.

C An investor, who is not familiar with SCORES or does not haveaccess to SCORES, can lodge complaints in physical form at any ofthe offices of SEBI. Such complaints would be scanned and alsouploaded in SCORES for processing.

(II) Features of SCORES: The salient features of SCORES are:(a) SCORES is web enabled and provides online access 24 x 7;(b) Complaints and reminders thereon can be lodged online at the

above website at anytime from anywhere;(c) An email is generated instantaneously acknowledging the receipt of

complaint and allotting a unique complaint registration number to thecomplainant for future reference and tracking;

(d) The complaint forwarded online to the entity concerned for itsredressal;

(e) The entity concerned uploads an Action Taken Report (ATR) on thecomplaint;


(f) SEBI peruses the ATR and closes the complaint if it is satisfied thatthe complaint has been redressed adequately;

(g) The concerned investor can view the status of the complaint onlinefrom the above website by logging in the unique complaintregistration number;

(h) The entity concerned and the concerned investor can seek andprovide clarification on his complaint online to each other;

(i) Every complaint has an audit trail; and(j) All the complaints are saved in a central database which generates

relevant MIS reports to enable SEBI to take appropriate policydecisions and or remedial actions, if any.

Shuchita Prakashan (P) Ltd.25/19, L.I.C. Colony, Tagore Town,

Allahabad - 211002Visit us : www.shuchita.com

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FOR NOTES


FOR NOTES

Documents

Solved Scanner Appendix - Shuchita · Companies seeking listing on BSE SME platform through IPO are required ... Solved Scanner Appendix CSEP M ... retail investors would be permitted