Posts Tagged ‘Shares’


Comprehensive Guidelines on Offer For Sale (OFS) of Shares by Promoters through the Stock Exchange Mechanism

CIRCULAR, CIR/MRD/DP/04/2013, dated January 25, 2013

1. Comprehensive guidelines on sale of shares through OFS mechanism were issued vide circular no CIR/MRD/DP/18/2012 dated July 18, 2012. Based on past experience of sale of shares through OFS, the mechanism of OFS has been found to be useful by market participants and popular for offloading shares of promoters in listed companies in order to achieve minimum public shareholding. With the deadline of June 2013 to achieve minimum public shareholding approaching, to encourage promoters to offload their shares through OFS route and based on market feedback, it has been decided to modify the OFS framework to make it more economical, efficient and transparent.

2. The aforesaid circular is amended as under:

2.1. Para 1 (b) (ii) shall be replaced by the following:

All promoters/promoter group entities of top 100 companies by market capitalisation in any of the last four completed quarters, market capitalisation being calculated as average market capitalisation in a quarter.

2.2. Para 2(c) shall be replaced by the following:

Indicative Price is the volume weighted average price of all the valid bids.

2.3. Para 5(d) (ii) shall be replaced by the following:

Orders shall be placed during trading hours.

2.4. Para 5 (d) (iii) shall be omitted.

2.5. Para 5(e) (i) shall be replaced by the following:

A separate window for the purpose of sale of shares through OFS shall be created. The following orders shall be valid in the OFS window:

A. Orders with 100% of margin paid upfront by institutional investors and non-institutional investors. Such orders can be modified or canceled at any time during the trading hours.

B. Orders without paying upfront margin by institutional investors only. Such orders cannot be modified or cancelled by the investors or stock brokers, except for making upward revision in the price or quantity.

2.6. Para 5 (e) (ii) shall be replaced by the following:

Cumulative bid quantity shall be made available online to the market throughout the trading session at specific intervals in respect of orders with 100% upfront margin and separately in respect of orders placed without any upfront margin. Indicative price shall be disclosed to market throughout the trading session. The indicative price shall be calculated based on all valid bids/orders.

2.7. Para 6 (a) shall be replaced by the following:

Clearing Corporation shall collect 100% margin in cash from non-institutional investors. In case of institutional investors who place orders/bids with 100% of margin upfront, custodian confirmation shall be within trading hours. In case of institutional investors who place orders without upfront margin, custodian confirmation shall be as per the existing rules for secondary market transactions. The funds collected shall neither be utilized against any other obligation of the trading member nor co-mingled with other segments.

2.8. Para 6 (b) shall be replaced by the following:

In case of order/bid modification or cancellation, such funds shall be released/ collected on a real time basis by clearing corporation.

2.9. Para 8 (i) (b) shall be replaced by the following:

Settlement shall take place on trade for trade basis. For non-institutional orders/bids and for institutional orders with 100% margin, settlement shall take place on T+1 day. In case of orders/bids of institutional investors with no margin, settlement shall be as per the existing rules for secondary market.

2.10. Para 8 (ii) (a) shall be replaced by the following:

In case of default in pay-in by any investor, 10% of the order value shall be charged as penalty from the investor and collected from the broker. This amount shall be credited to the Investor Protection Fund of the stock exchange.

3. All other conditions for sale of shares through OFS framework shall be as per SEBI circular CIR/MRD/DP/18/2012 dated July 18, 2012.

4. Stock Exchanges are directed to:

4.1. take necessary steps and put in place necessary systems for implementation of the above.

4.2. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.

4.3. bring the provisions of this circular to the notice of the member brokers of the stock exchange to also to disseminate the same on their website.

5. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Click here to download the complete text of the above Circular in PDF Format.

Source: Securities and Exchange Board of India.


Addendum to Circular No. CIR/MRD/DP/21/2012 dated August 02, 2012 on activation of ISIN in case of additional issue of shares/ securities

CIRCULAR, CIR/MRD/DP/ 24 /2012, dated September 11, 2012

To,

The Depositories,

The Stock Exchanges

1. Please refer to SEBI circular CIR/MRD/DP/21/2012 dated August 02, 2012 on activation of ISIN in case of additional issue of shares/ securities.

2. In partial modification, the earlier point 3 and 5 of the aforesaid circular shall be replaced as under –

“3. Further, in order to curtail the transfer of additional issue of shares / securities including by way of further public offerings, rights issue, preferential allotment, bonus issue etc of the listed company, prior to receipt of final listing / trading approval, the depositories shall devise a mechanism so that such new securities created shall be frozen till the time final listing/ trading permission is granted by the exchange.”

“5. The stock exchanges are advised to provide the details to the depositories whenever final listing / trading permission is given to securities. Further, in case of issuance of equity shares by a company, listed on multiple stock exchanges, the concerned stock exchanges shall synchronize their effective dates of listing /trading approvals and intimate the same to depositories in advance.”

3. The Depositories are advised to:-

a) make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately, as may be applicable/necessary;

b) bring the provisions of this circular to the notice of their DPs and also to disseminate the same on their website.

4. This circular is being issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 and section 19 of the Depositories Act, 1996 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.

Click here to download the complete text of the above Circular in PDF Format- Addendum to Circular No. CIR/MRD/DP/21/2012 dated August 2, 2012- Sep 11, 2012.

Source: Securities and Exchange Board of India.


CIRCULAR, CIR/CFD/DIL/10/2012, dated August 28, 2012

To

All Stock Exchanges

All Depositories

All Registered Merchant Bankers

All Registered Registrars to an Issue/STA

All Registered Custodians

1. SEBI, vide circular No: CIR/CFD/DIL/3/2011 dated June 03, 2011, has prescribed the framework for redemption of IDRs into underlying equity shares. The circular has, inter-alia, stated that after the completion of one year from the date of issuance of IDRs, redemption of the IDRs shall be permitted only if the IDRs are infrequently traded on the stock exchange(s) in India.

2. The Hon’ble Finance Minister in his Budget speech on March 16, 2012, has proposed, inter alia, that two-way fungibility of IDRs be permitted subject to a ceiling, with the objective of encouraging greater foreign participation in Indian capital market.

3. For implementation of the said budget proposal and to improve the attractiveness of IDRs as an instrument thereby ensuring long term sustainability of IDRs, it is decided to prescribe a framework for two-way fungibility of IDRs.

4. However, to retain the domestic liquidity, it is decided to allow partial fungibility of IDRs (i.e. redemption/conversion of IDRs into underlying equity shares) in a financial year to the extent of 25 % of the IDRs originally issued. Suitable instructions for modifying the existing legal framework governing IDRs, in order to implement the decision to allow redemption of IDRs into underlying equity shares and re-conversion of equity shares of a foreign issuer (which has already listed their IDRs) into IDRs, will be issued separately.

5. As and when the instructions for modifying the existing legal framework referred to at para 4 above are issued, this circular shall be effective and SEBI circular No: CIR/CFD/DIL/3/2011 dated June 03, 2011 would stand rescinded.

6. This circular is issued in exercise of the powers conferred under Section 11 read with Section 11A of the Securities and Exchange Board of India Act, 1992.

7. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework” and “Issues and Listing”.

Click here to download the complete text of the above Circular in PDF Format- CIRCULAR, CIR/CFD/DIL/10/2012, dated August 28, 2012.

Source: Securities and Exchange Board of India.

 

 

 


Gazette Notification GSR 534(E) dated 14/07/2011- Clarification Regarding

Notification, dated 16.08.2012

[F. No. 14/11/2012-CL-VII]

To,

All Regional Directors,

All Registrars of Companies,

The Institute of Company Secretaries of India,

The Institute of Chartered Accountants of India,

The Institute of Cost Accountants of India,

I am directed to refer to the Gazette Notification No. GSR 534(E) dated 15th July, 2011 whereby companies were exempted from obtaining the approval of the Central Government for payment of remuneration exceeding the limits imposed by the Companies Act, 1956 in respect of the managerial persons not having any interest in the capital of the company and not related to the directors or promoters thereof.

In this regard, a number of representations have been received from stakeholders pointing to the corporate practice of allocating shares by way of qualification shares and/or shares under any scheme for allotment of shares to the employees of the company including under Employees’ Stock Option Plan (ESOP).

It is hereby clarified that any employee of a company holding shares of the company up to 0.5% of paid up share capital thereof under any scheme formulated for allotment of shares to such employees including under Employees’ Stock Option Plan or by way of qualification shares are also covered under the category of persons not having any interest in the capital of the company in terms of the Ministry’s notification GSR 534(E) dated 14.07.2011.

Click here to download the complete text of the above Notification in PDF Format- Notification, dated 16.08.2012.

Source: Ministry of Corporate Affairs.

 

 

 


CIRCULAR, CIR/MRD/DP/ 21 /2012, dated August 02, 2012

To,

The Depositories,

The Stock Exchanges

1. Please refer to SEBI circular No SEBI/MRD/DEP/Cir-2/06 dated January 19, 2006.

2. In addition to the above circular, it has now been decided that in case of IPO for debt securities the ISINs shall be activated only on the date of commencement of trading on the stock exchange.

3. Further, in order to curtail the transfer of additional issue of shares/securities viz. further public offerings, rights issue, preferential allotment and bonus issue of the listed company, prior to receipt of final listing/ trading approval, it has been decided that the depositories shall devise a mechanism so that such new securities created shall be frozen till the time final listing/ trading permission is granted by the exchange.

4. In order to achieve the above, the Depositories are advised to allot such additional shares/securities under a new temporary ISIN which shall be kept frozen. Upon receipt of the final listing/ trading permission from the exchange for such additional shares/ securities, the shares/securities credited in the new temporary ISIN shall be debited and the same would get credited in the preexisting ISIN for the said security. Thereafter, the additional securities shall be available for trading.

5. The exchanges are advised to provide the details to the depositories whenever final listing/trading permission is given to securities.

6. The Depositories are advised to:-

a) make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately, as may be applicable/necessary;

b) bring the provisions of this circular to the notice of their DPs and also to disseminate the same on their website; and

7. This circular is being issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 and section 19 of the Depositories Act, 1996 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.

Harini Balaji

Deputy General Manager

022-26449372

harinib@sebi.gov.in

Click here to download the complete text of the above Circular in PDF Format- Activation of ISIN in case of additional issue of shares/ securities.

Source: Securities and Exchange Board of India.