Investors

1
Investors Protection Companies Act,
2013Penal Provisions under Listing
AgreementRecent SEBI announcements
ICICSI WIRC Seminar Indore Jan 4, 2014
2
The Companies Bill 2012, which has finally been
passed by the Government isn't just old candy in
a new wrapper, several new concepts and
amendments in the age old Companies Act, 1956
have been introduced changing the compliance
scenario in the corporate world in various ways
to protect the interest of all investors by
giving impetus to growth and bring transparency.
New Companies Act, 2013 Investors Protection
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Definitions Section 2 of the New Act

• Definition of abridged prospectus
• Section 2 (1) defining the abridged prospectus
  has now given power to SEBI to specify content of
  abridged prospectus. Earlier it was with the
  Central Government.
• 2. New definitions provided not in the earlier
  Act like CEO. CFO, GDR, Independent Director,
  Indian Depository Receipt (IDR), promoter,
  related party, voting rights, whole time director
  (WTD), Key Managerial Personnel to cover CEO,
  CFO, Company Secretary and WTD,
• 3. The New Act has broadened the concept of
  officer who is in default
• Clause (vii) of Section 2(60) now states that
  officer who is in default to include
• In respect of the issue or transfer of any
  shares of a company, the
• share transfer agents, registrars and merchant
  bankers to the issue or transfer
• By covering CEO, CFO as Key Managerial Personnel
  they are also brought under this section of
  officer in default.

4
Chapter II Incorporation of Company

• Sub clause (c) of Section 7 (1) states that at
  the time of incorporation, an affidavit from each
  of the subscriber to the Memorandum and from
  person named as First Directors stating that he
  is not convicted of any offence in connection
  with the promotion, formation or management of
  any Company, or found guilty of any fraud under
  the company law during preceding five years.
• Sub section 5 further states that If any person
  furnishes any false or incorrect particulars of
  any information or suppresses any material
  information, of which he is aware in any of the
  documents filed with the Registrar in relation to
  the registration of a company, he shall be liable
  for action under Section 447.
• Section 12 (3) (c) requires every company to
  print Corporate Identity Number (CIN) on its
  business letters, billheads, letter paper and in
  all its notices and other official publication.
• Section 13 (8) states that a Company which has
  raised money from public through prospectus and
  still has any unutilized amount out of money so
  raised, shall not change its object for which it
  raised money through Prospectus unless a special
  resolution is passed and details of such
  resolution to be published in newspaper and on
  its website. Further, dissenting shareholders to
  be given opportunity to exit by the promoters and
  controlling shareholders as per SEBI regulations.
  

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Chapter III Prospectus and allotment of
securities

• Many changes are made in this Chapter to align
  with best practices to be followed in offer of
  securities. SEBI is ensuring the same though its
  regulations but new changes in the Act have
  brought more clarity and these changes are for
  the benefit of investors. Some of these changes
  listed under are
• Power of SEBI extended to administer sections of
  listed company or a company intending to get
  listed, to cover provisions related to Share
  Capital
• The content in the Prospectus has now been made
  more detailed
• Variation in terms of contract or Objects
  referred in the prospectus special resolution,
  notice in the news papers and exit opportunity to
  dissenting shareholders
• Money raised through prospectus can not be used
  for buying, trading or dealing in equity shares
  of any other listed company
• Section 37 now allows any person, group of
  persons or association who is affected by
  misleading statement or any inclusion or omission
  of any matter in the Prospectus, to file a suit
  or take any action under Section 34, Section 35
  and Section 36 of the Act.
• Section 42 (6) requires to complete allotment of
  securities under private placement within 60 days
  .

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Chapter IV Share Capital and Debentures

1. Section 47 dealing with voting rights now
   restricts right of preference share holders
   only on the resolution which affects rights of
   preference shareholders. For common matter
   rights of equity and preference shareholders
   shall be in same proportion to their holding of
   capital. Preference Shareholders get right to
   vote on all matters when dividend are in arrears
   for a period of two years or more.
2. As per Section 48 in case share capital is
   divided into different classes of shares,
   variation of their rights by one class of
   shareholders affects the rights of any other
   class of shareholders, then 3/4th consent of such
   other class of shareholders is needed.
3. Section 52 on use of share premium account Sub
   section (3) now allows certain companies to use
   the same for in paying up unissued equity shares
   to be issued to members as bonus shares, writing
   off expenses of or commission paid or discount on
   any issue of equity shares or for the purchase of
   its own shares or other securities under Section
   68 (Is it good for investors ?)
4. Section 56 many changes on transfer and
   transmission of securities
5. Listed and non listed companies no distinction
   instrument of transfer to be delivered in 60 days
6. Time period for allotment reduced from 3 months
   to 2 months, transfer and transmission 2 months
   to 1 month, allotment of debentures from 6 to 3
   months
7. Punishment increased for the Company, officer in
   default and Depositories and Depository
   Participants in case of any fraud

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Chapter IV Share Capital and Debentures
Continue

• 5. Section 58 (3) restricts the power of
  making appeal in case of refusal of transfer to
  transferee only contrary to the previous Act,
  wherein it was extended to both transferor or the
  transferee
• 6. Bonus shares - Section 63 (3) clarifies
  that bonus shares can not be issued in lie of
  dividend
• 7. Further issue of shares - Section 62 (1)
  (b) allows further issue of shares to employees
  by way of ESOP subject to approval of
  shareholders by way of special resolution (Is it
  good?)
• 8. Reduction of share capital - Section 66 (1)
  proviso states that no reduction of capital will
  be allowed if the Company is in arrears for
  payment of deposits or interest payable thereon
• 9. Buy back of odd lot through stock exchanges
  is now dispensed with. (Is it good ?)
• 10. Section 70 (2) prohibits buy back in certain
  cases of default, but if the default is remedied
  and a period of three years has lapsed, then it
  is allowed.
• Power to nominate Section 72 now extends this
  to all securities instead of only shares and
  debentures
• Chapter V Deposits Entire concept rewritten.
  More investors protection if to raise deposits
  from public. Powers given to RBI. The scope of
  the Act mainly for deposits from
  shareholders/members.
• Chapter VI Registration of Charges
• (No significant changes relating to investors)

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Chapter VII Management and Administration

• 1. Section 93 requires (in addition to
  compliance done with Stock Exchanges) every
  listed company to file a return in the prescribed
  form with the Registrar with respect to change in
  the number of shares held by promoters and top
  ten shareholders of such company within 15 days
  of such change.
• Section 94 (1) allows to keep registers and
  copies of return at any other place in India in
  which more than one-tenth of the total numbers of
  members reside, if approved by special resolution
  and prior intimation to the Registrar.
• Section 96(1) requires first AGM to be held
  within 9 months instead of 18 months earlier.
  Further Sec 96(2) clarifies that AGM to be held
  between 9.00 am to 6.00 pm
• Section 101 now allows notice of general meeting
  can be sent through electronic mode and notice
  must be sent 21 days clear days. Notice can not
  be convened by way of advertisement in newspaper.
• Section 102 requires that in explanatory
  statement to notice of special business, it
  should specify the nature of concern or interest
  if any of every director, Manager if any, other
  KMP and relative of them. Sub section 4 further
  states if default is made in terms of non
  disclosure or insufficient disclosure, then such
  person to hold such benefit in trust for the
  Company and shall be liable to compensate the
  Company to the extent of such profit or benefit.

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Chapter VII Management and Administration
Cont.

• Section 103 now mandates larger quorum for
  meetings of members in case of a Public Company
• Section 118 (1) requires every Company to
  maintain minutes of every meeting of any class of
  shareholders or creditors and every resolution
  passed by postal ballot.
• Section 118 (10) further stipulates that every
  company shall observe secretarial standards wrt
  to General and Board meetings specified by ICSI
  and approved as such by the Central Government.
• A new Section 121 requires every listed company
  to prepare a Report on each AGM and file with the
  Registrar within 30 days of the conclusions of
  AGM.

QUORUM (No. of Members personally Present) NUMBER OF MEMBERS AS ON THE DATE OF MEETING
5 1000
15 1000 lt number 5000
30 5000
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Chapter VIII Declaration and Payment of
Dividend

• Section 123 (3) restricts interim dividend
  payment when the Company has incurred loss during
  the current financial year till last immediate
  quarter, such interim dividend can not be
  declared at a rate higher than the average
  dividends declared by the Company during previous
  three financial years.
• Sub section (6) further restricts payment of
  dividend if a company fails to comply with the
  provisions of Section 73 Acceptance of Deposits
  and Section 74 Repayment of Deposits. Earlier
  condition of default in the redemption of
  preference shares is now dropped.
• Section 124 deals with unpaid dividend.
  Subsection (2) of Section 124 requires every
  company to prepare a statement containing the
  names, last know address and unpaid dividend to
  be paid to each person on its website and also on
  any other website approved by the Central
  Government.
• Section 124(6) states that all shares in respect
  of which unpaid or unclaimed dividend has been
  transferred, shall also be transferred by the
  company in the name of Investor Education and
  Protection Fund (IEPF).
• Section 125 dealing with IEPF has covered new
  categories of amount that would be credited and
  purposes for which IEPF may be utilized.

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Chapter IX Accounts of Companies

• Section 2(40) has defined the term financial
  statement which in addition to PL, B/ S covers
  Cash Flow Statement and Statement showing changes
  in equity.
• Section 129 (3) requires every company having
  one or more subsidiaries, to prepare a
  consolidated financial statement of the Company
  and all its subsidiaries to be laid before AGM. A
  salient features of the financial statement of
  the subsidiaries to be provided. The term
  subsidiary to include associate and JV company.
• New Section 130 now enables to re-open or recast
  books of accounts and financial statements based
  on application of the Central Government, I T
  dept, SEBI or other statutory body or authority
  or any person concerned and an order is made by
  a court of competent jurisdiction or the
  Tribunal.
• Same way new Section 131 enables the Board of
  Directors to prepare revised financial statements
  or a revised Board Report in respect of any of
  the three preceding financial years after
  obtaining approval of the Tribunal.
• Section 134(3) lists various items to be part of
  the report by Board of Directors this shall
  include, a statement on declaration given by
  independent directors (IDs), particulars of
  loans, guarantees or investments under Section
  186, particulars of contracts or arrangements
  with related parties, formal evaluation of
  Boards performance for Listed Co., nomination
  and remuneration committee for Listed Co. etc

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Chapter IX Accounts(National Financial
Reporting Authority)
Constitution of National Financial Reporting
Authority (NFRA)

• Section 132 (1) states that the Central
  Government may, by notification, constitute
  National Financial Reporting Authority to provide
  for matters relating to accounting and auditing
  standards under this Act.
• 2 . Section 132 (2) - Important functions of the
  NFRA
• Make recommendations to the Central Government on
  the formulation and laying down of accounting and
  auditing policies and standards for adoption by
  companies or class of companies or their
  auditors, as the case may be.
• Monitor and enforce the compliance with
  accounting standards and auditing standards in
  such manner as may be prescribed.
• Oversee the quality of service of the professions
  associated with ensuring compliance with such
  standards, and suggest measures required for
  improvement in quality of service and such other
  related matters as may be prescribed.

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Chapter IX Accounts - NFRA and CSR

• Section 132 (4) Powers of the NFRA
• Has power to investigate either suo moto or on a
  reference made to it by the Central Government,
  for such class of bodies corporate or persons in
  such manner as may be prescribed into the matters
  of professional misconduct committed by
• - Any member or
• - Firm of Chartered Accountants registered
  under Chartered
• Accountants Act, 1949
• Have the same powers as are vested in a civil
  court under code of Civil Procedure, 1908
• Section 133
• The Central Government may prescribe the
  standards of accounting or any addendum thereto,
  as recommended by ICAI in consultation with and
  after examination of the recommendations made by
  the NFRA.
• Section 135 Corporate Social Responsibility
• Section 136 (1) mandates every listed company
  to place its financial statements including
  Consolidated Financial Statements, separate
  audited accounts in respect of each of its
  subsidiary on its website

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Chapter X Audit and Auditors

• Section 139 (2) No listed company to appoint an
  individual as auditor for more than one term of
  five consecutive years and an audit firm as
  auditor for more than two term of five
  consecutive years. Five years cooling period
  from completion of the term.
• Section 140 Removal and resignation of auditor
• Section 141 Eligibility , qualification and
  disqualification of auditor
• Any association direct or through relative or
  partner with the subsidiary, holding company,
  associate company disqualifies
• Indebtedness to subsidiary, holding or associate
  company
• Guarantee given , security provided in connection
  with indebtedness of any third person
• Section 143 Powers and duties of auditor. Sub
  section (14) states that these provisions are
  applicable to cost accountants and company
  secretary in practice
• New Section 144 specifies auditor not to render
  certain services

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Chapter XI Appointment and Qualification of
Directors

• Section 149 (3) requires every listed company to
  have at least 1/3 rd directors as Independent
  Directors (ID).
• Section 149 (5) gives definition of ID and
  several disqualification
• Section 149 (7) Code of conduct is defined for
  ID
• Section 149 (8) No stock option to ID and scope
  of remuneration is defined
• Section 149 (9 10) Five year term for ID, 2
  consecutive terms, cooling period of 3 years for
  re-appointment and not to engage with the company
  during the cooling period of 3 years
• Section 149 (12) Retirement by rotation not
  applicable to ID
• Section 151 provides a listed company may have
  one director elected by small shareholders .
  Small shareholder a shareholder holding shares
  of nominal value of not more than Rs. 20,000
• Section 166 (New provision) Duties of directors
  are defined first time
• Section 168 (New provision) Resignation of
  Director , to be placed in next general meeting
  of the company

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Chapter XII Meeting of Board and its Powers

1. Section 177 dealing with audit committee , sub
   section (9) states that every listed company or
   such class or classes of companies as may be
   prescribed shall establish a vigil mechanism for
   directors and employees to report geniune
   concerns. Sub section (10) further provides for
   adequate safeguards against victimization of
   persons who use such mechanism and direct access
   to chairperson of the Audit Committee
2. Section 178 (1) Every listed companies to
   constitute the Nomination and Remuneration
   Committee consisting of 3 or more non-executive
   directors out of which not less than one half
   shall be IDs
3. Section 178 (2) states that Nomination Committee
   shall identify persons who are qualified to
   become directors and who may be appointed in
   senior management and recommend to the Board
   their appointment. The Committee to also
   recommend to the Board a policy relating the
   remuneration for the director, KMP and other
   employees
4. Sub section (5) Stakeholders Relationship
   Committee when gt 1000 holders
5. Sub Section (7) - Chairperson of each committees
   to attend AGM

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New Committees Corporate Governance enhanced

• Stakeholders Relationship Committee - Section 178
  (5)
• The Board of Directors of a company which
  consists of more than one thousand shareholders,
  debenture-holders, deposit-holders and any other
  security holders at any time during a financial
  year shall constitute a Stakeholders Relationship
  Committee consisting of a chairperson who shall
  be a non-executive director and such other
  members as may be decided by the Board.
• CSR Committee - Section 135
• Every company having net worth of rupees five
  hundred crore or more, or turnover of rupees one
  thousand crore or more or a net profit of rupees
  five crore or more during any financial year
  shall constitute a Corporate Social
  Responsibility Committee of the Board consisting
  of three or more directors, out of which at least
  one director shall be an independent director

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Chapter XII Certain dealings by the Board

1. Section 186 (4) mandates companies to disclose
   to the members in financial statements the full
   particulars of loans given, investment made or
   guarantee given or security provided and the
   purpose for which it is to be utilized by the
   recipient of the loan or guarantee or security
2. Entities registered under Section 12 of SEBI Act
   1992 like stock broker, sub broker, share
   transfer agent, banker to issue, merchant banker,
   underwriter etc as per Sub Section (6) , these
   entities can not take inter-corporate loan or
   deposit exceeding the prescribed limit and such
   company to furnish the details of loans or
   deposits in its financial statement
3. Section 186(1) No investment more than two
   layers of investment companies
4. Section 188 (1) New transactions covered under
   related party transactions for which prior
   approval of Board needed. Also to be disclosed
   the Boards report to shareholders along with
   justification for entering into such transactions
5. New Provision Section 194 Prohibition on
   forward dealing in securities of company by
   Director or KMP
6. New Provision Section 195 Prohibition of
   Insider Trading by Director or KMP

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Chapter XIII Managerial Remuneration
Secretarial Audit

• Section 197 (12) has mandated every listed
  company to disclose in the Boards report, the
  ratio of remuneration of each director to the
  median employees remuneration and such other
  details as may be prescribed.
• 2. Section 204 (1) prescribes every listed
  company and a company belonging to other class of
  companies as may be prescribed shall annex with
  its Board report a secretarial audit report,
  given by a company secretary in practice, in such
  form as may be prescribed.
• 3. Sub section (2) further states that it
  shall be the duty of the Company to give all
  assistance and facilities to the Company
  Secretary in Practice, for auditing the
  secretarial and related records of the company.
• 4. As per sub-section (3) the Board report
  shall also contain full explanation against any
  qualification or other remarks made by the
  Company Secretary in practice.
• Section 205 which is also a new provision
  prescribes functions of Company Secretary.
• Chapter XIV onwards not considered except Chapter
  XV on Compromise, Arrangements and Amalgamation
  (Is it good?)
• Section 230(4) states that only persons holding
  not less than 10 of shareholding or having
  outstanding debt not less than 5 of total debt
  shall be eligible to raise any opposition to an
  arrangement or compromise.
• In case of merger of Listed co to Unlisted co,
  unlisted company can continue to be unlisted

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SEBI has recently come out with following two
circulars 1. September 30, 2013 Standard
Operating Procedure for suspension and revocation
of trading of shares of listed entities. 2.
November 18, 2013 Compliance with provisions of
Equity Listing Agreement - Monitoring by Stock
Exchanges
Penal Provisions under Listing Agreement
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SEBI Circular 30th September 2013 Effective
enforcement

• Amendment to Bye-laws of recognized stock
  exchange with respect to non compliance of
  certain listing conditions and adopting standard
  Operating Procedure for suspension and revocation
  of trading of shares of listed entities for such
  non compliances
• 1. Uniform fine structure for non-compliance of
  certain clauses of the listing agreement.
• 2. Standard Operating Procedure (SOP) for
  suspension and revocation of suspension of
  trading in the shares of such listed entities.

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Circular - 30th September 2013 Effective
enforcement

• 1. Stock Exchange to bring in place appropriate
  system to enforce the liabilities of listed
  entities and their promoters/promoter group as
  disclosed to the concerned stock exchange under
  the clause 35 of the Listing agreement
• 2. During the process of the suspension of the
  trading/revocation of trading as provided in the
  SOP, the concerned recognized stock exchange
  shall intimate the details of the concerned
  non-compliant entity and its promoter /promoter
  group to the depositories. On receipt of such
  intimation, the depositories shall freeze or
  unfreeze, as the case may be, the entire
  shareholding of the promoter and promoter group
  in such entity.
• 3. The recognized stock exchanges shall disclose
  on its website the action/s taken against the
  listed entities for non-compliance/s of the
  listing conditions including the details of
  respective requirement, amount of fine, period of
  suspension, freezing of shares, etc.

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Effective Enforcement Imposition of Fine

• 1. The recognised stock exchange shall impose
  fine on listed entities for non- compliance with
  certain clauses of the listing agreement due to
  non-submission /delay in submission of
  reports/documents to recognised stock exchange.
• 2. The amount of fine realized as per the above
  structure shall be credited to the "Investor
  Protection Fund" of the concerned recognised
  stock exchange.
• 3. To Disseminate on website the names of
  non-compliant listed entities that are liable to
  pay fine for non-compliance of above clause of
  Listing Agreement.
• 4. If any non-compliant listed entity fails to
  pay the fine despite receipt of the notice as
  stated above, the recognised stock exchange may
  initiate appropriate enforcement action including
  prosecution.

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Effective Enforcement Imposition of Fine clause
wise
Clause of listing agreement Fine payable for 1st non-compliance Fine Payable each subsequent and consecutive noncompliance
Clause 31 annual report submission If non-compliance continues for more than 5 days, Rs.1,000/- per day till the date of compliance. Rs.2,000/- per day till the date of compliance.
Clause 35 Submission of shareholding pattern Rs.1,000/- per day till the date of compliance and If non-compliance continues for more than 15 days additional fine of 0.1 of paid up capital of the entity or Rs.1 crore, whichever is less. Rs.2,000/- per day till the date of compliance and If non-compliance continues for more than 15 days additional fine of 0.1 of paid up capitalof the entity or Rs.1 crore, whichever is less.
Clause 41 Financial results Rs.5,000/-per day till the date of compliance and If non-compliance continues for more than 15 days additional fine of 0.1 of Paid Up capital of the entity or Rs. 1crore, whichever is less. Rs.10,000/- per day till the date of compliance and If non-compliance continues for more than 15 days additional fine of 0.1 of Paid Up capital of the entity or Rs.1 crore, whichever is less.
Clause 49 Rs.1,000/- per day till the date of compliance Rs.2,000/- per day till the date of compliance
Paid up capital as on first day of the financial
year in which the non compliance occurs
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Creation of a new category "Z" for trading

• 1. The recognised stock exchange shall create a
  new category "Z" for trading of shares of such
  non- compliant listed entities wherein trades
  shall take place in 'trade for trade basis.
• 2. If a listed entity commits two or more
  consecutive defaults in compliance of the
  specified clauses of the listing agreement within
  15 days from date of the notice issued under this
  circular, the concerned recognised stock exchange
  shall, in addition to imposing fine as specified
  above, move the scrip of the listed entities to
  "Z" category.
• 3. The recognised stock exchange shall move back
  the scrip of the listed entity to the normal
  trading category, if it complies with respective
  clauses of the listing agreement and completely
  pays fine prescribed under the circular.

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Effective Enforcement Criteria for Suspension

• 1. Failure to comply with clause 31 of listing
  agreement with respect to submission of Annual
  Report for 2 consecutive financial years
• 2. Failure to comply with clause 35 of listing
  agreement with respect to submission of
  shareholding pattern for two consecutive quarters
• 3. Failure to comply with clause 41 of listing
  agreement with respect to submission of financial
  results for two consecutive quarters
• 4. Failure to comply with clause 49 of listing
  agreement with respect to submission of corporate
  governance compliance report for two
  consecutive quarters
• 5. Failure to submit information on the
  reconciliation of shares and capital audit
  report, for two consecutive quarters
• 6. Receipt of the notice of suspension of trading
  of that entity by any other recognised stock
  exchange on any or all of the above grounds

27
Effective Enforcement SOP for Suspension of
Trading
1. Before suspension of trading the concerned
recognized stock exchange shall send written
intimation to the non-compliant listed entity
calling upon it to comply with respective
requirement/s and pay the applicable fine within
21 days of the date of the intimation. 2. If the
non-compliant listed entity fails to comply with
aforesaid requirement/s and pay fine despite the
receipt of the intimation of the recognised stock
exchange within the time as aforesaid, the
concerned recognised stock exchange shall
forthwith intimate the depositories to freeze
entire shareholding of the promoter and promoter
group of the non-compliant entity.
Simultaneously, the recognised stock exchange
shall give a 21 days (prior to the proposed date
of suspension) public notice on its website
proposing suspension of trading in the shares .
3. If the non-compliant listed entity complies
with respective requirement/s and pays fine five
days before the proposed date of suspension, the
trading in its shares shall not be suspended on
the proposed date and the concerned recognised
stock exchange shall intimate to the depositories
to unfreeze, after one month from the date of
compliance, the shares of the promoter and
promoter group of the entity. Simultaneously, the
recognised stock exchange shall give a public
notice on its website informing compliance by the
entity. 4. In case of failure to comply with
respective requirement/s and/or pay fine as
aforesaid, the recognised stock exchange shall
suspend the trading in the shares of a
non-compliant listed entity. The entire
shareholding of promoter/prompter group of such
non-compliant listed entity shall remain frozen
till expiry of three months from the date of
revocation of suspension.
28
SOP for Suspension of Trading .Continue

• While suspending trading in the shares of the
  non-compliant entity the recognised stock
  exchange shall send intimation of suspension to
  other recognised stock exchanges where the shares
  of the non-compliant entity are listed. On
  receipt of such intimation the other recognised
  stock exchanges shall also suspend trading in the
  shares of the entity.
• After 15 days of suspension, trading in the
  shares of non-compliant entity may be allowed on
  the "Trade for Trade" basis, on the first trading
  day of every week for 6 months. In this regard,
  the recognised stock exchange shall give
  instruction to its trading members/stock brokers
  to obtain confirmation from clients before
  accepting an order for purchase of shares of
  non-compliant entity on the 'Trade for
  Tradebasis. Pre issue application
  processing/Compliance
• The recognised stock exchange shall put in place
  a system to publish caution message "Trading in
  shares of the company is under 'suspension and
  trade to trade basis' and trading shall stop
  completely if the company remains not compliant
  for six months " on trading terminals.

29
Effective Enforcement SOP for revocation of
suspension

• If the non-compliant listed entity complies with
  the aforesaid requirement/s and pays applicable
  fine within three months from the date of
  suspension, the recognized stock exchange may
  revoke the suspension of trading of its shares.
• If the non-compliant listed entity complies with
  the aforesaid requirement/s and pays
  applicable fine after three months from the date
  of suspension, the recognized stock exchange may
  revoke the suspension of trading of its shares
  after a period of three more months from the date
  of such compliance
• The recognised stock exchange shall, 7 days prior
  to revocation of suspension of trading in shares
  of the entity, issue public notice on its website
• After 3 months from the date of revocation of the
  suspension, the recognised stock exchange shall
  send intimation to the depositories to unfreeze
  the shares of the promoter and promoter group
• After revocation of suspension, the trading of
  shares shall be permitted only in the 'Trade for
  Trade' basis for a period of three months from
  the date of revocation and after this period of
  three months, trading in the shares of the entity
  shall be shifted back to the normal trading
  category, after giving prior notice of 7 days to
  it

30
November 18, 2013 Circular Monitoring by Stock
Exchanges

1. Stock Exchanges (SEs) to put in place appropriate
   framework to effectively monitor the adequacy and
   accuracy of the disclosures made by listed
   companies.
2. SEs to devise the framework in such a way that it
   detects any non-compliance / violation of the
   provisions of Securities Contracts (Regulation)
   Act,1956, Securities and Exchange Board of India
   Act, 1992, the Rules and Regulations made there
   under, Listing Agreement, and any other
   applicable laws.
3. Treat inadequacy and inaccuracy of disclosure as
   non-compliance wherever applicable and proceed
   further as per the Standard Operating Procedure
   laid down by SEBI vide Circular
   No.CIR/MRD/DSA/31/2013 dated September 30, 2013
4. Submit to SEBI an "Exception Report" in addition
   to the existing reporting requirements, with the
   details of companies which do not respond to the
   clarifications sought by them and/or where the
   response submitted by the company is not
   satisfactory in the opinion of the Stock
   Exchange.
5. Obtain the details of the promoters / directors
   and/or Key Managerial Personnel of the listed
   companies who shall be responsible for ensuring
   compliance with the provisions of the Listing
   Agreement and in case of defaults, disclose such
   details on its website

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November 18, 2013 Circular Parameters for
Monitoring

• Indicative parameters to be included in the
  framework for monitoring by the Stock Exchanges
  in respect of Clause 35, 36, 41 and 49 of the
  Equity Listing Agreement
• The quality and substantive compliance with
  respect to Clause-35 shall be monitored by
  comparing with the filings of the previous
  quarter. Such comparison shall include changes,
  if any, in the names of the promoters, their
  shareholding, encumbered shares, persons holding
  more than the required percentage in public
  category, and ensure as to whether the requisite
  disclosures have been made in compliance with
  SEBI (Prohibition of Insider Trading)
  Regulations, 1992, SEBI (Substantial Acquisition
  of Shares and Takeovers) Regulations, 2011 and
  any other applicable laws rules and regulations.
• The disclosures with respect to Clause-41
  (including handling of complaints relating to
  inadequate disclosures and non-compliances) and
  Clause 49 shall be monitored for quality and
  substantive compliance and necessary action
  should be initiated, if found otherwise
• Clause 36 shall be monitored by taking into
  account the following
• Information Verification SEs to keep themselves
  informed of the updates in various media
  including print and mass media with respect to a
  listed company and while scrutinizing the
  disclosures made under Clause 36, ensure that any
  important information has not been omitted to be
  disclosed by the company.
• Follow-up on material information SEs
  shall follow up with the listed companies at
  every stage for the updates on material events
  reported, either suo moto or upon receipt of
  information from other sources.

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November 18, 2013 Circular Fine and Reporting
to SEBI

• SE to seek further information/clarification in
  case of any deficiency from companies, not later
  than 2 days from the date of the said disclosure
• Cos to respond within 5 days and query of SEs and
  reply received to be placed on website of the
  Stock Exchange and tagged with the relevant
  disclosure
• The fine shall be levied on the company in terms
  of the said circular if reply given by the
  company not satisfactory, to be treated as
  non-compliance and the date of non-compliance
  shall be deemed to be the date on which the last
  reply was received from the company on the query
  raised. In case the company does not reply to the
  query raised by the company, the deemed date of
  non-compliance would be the last date by which
  company ought to have replied to the last
  clarification/communication of the Stock
  Exchange. SOP as per Sept 30, 2013 to be followed
  for action of such non compliance.
• The Exception Report shall be submitted to SEBI
  within 45 days from the end of each quarter with
  respect to Clauses 35, 41 and 49 and on a weekly
  basis with respect to Clause 36.
• The Stock Exchanges shall set up a separate
  monitoring cell with identified personnel to
  ensure compliance with this circular.

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Thank you