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SEBI Consultation Paper on proposed amendment to PIT Regulations: Key Updates: On July 29, 2024, the Securities and Exchange Board of India (SEBI) released a consultation paper proposing significant amendments to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations). This consultation seeks public feedback on changes aimed at refining the definitions of ‘Connected Persons’ and ‘Relative’ in line with the Companies Act, 2013, and the Income Tax Act, 1961. Key Terminology: - Insider: Under Regulation 2(1)(g) of the PIT Regulations, an insider is defined as anyone who is either i) a connected person or ii) has access to Unpublished Price Sensitive Information (UPSI). - Connected Person: Regulation 2(1)(d) defines this as an individual with a relationship with the company that could reasonably provide access to UPSI. - Immediate Relative: This includes a spouse, parent, sibling, and child of the person or their spouse, who is either financially dependent on the person or consults them about trading decisions. Rationale Behind the proposed Amendments: - Updating ‘Relative’ Definition: SEBI proposes aligning the definition of ‘relative’ with that in the Income Tax Act, 1961. - Expanding ‘Connected Persons’ Definition: To address potential gaps, SEBI introduces the concept of “Deemed Connected Persons.” This expansion aims to cover individuals who, due to their close relationships with connected persons, might access UPSI but are currently outside the scope of existing regulations. -Defining ‘Deemed Connected Persons’: The new definition, drawn from the Companies Act, 2013, includes: -Firms or their partners or employees where a connected person is a partner. Individuals who follow the advice, directions, or instructions of a connected person. -Corporate bodies whose directors or managers act according to a connected person’s guidance. -Individuals sharing a household or residence with a connected person. -Those with significant financial relationships with a connected person, such as through employment or frequent transactions. -Hindu Undivided Families (HUFs) where the Karta or any member is a connected person or relative. Onus of Proof: In cases where a charge is filed under Regulation 4(1) of PIT Regulations, against deemed connected persons, the burden of proof will lie with them to demonstrate that they did not possess UPSI, as stipulated in Regulation 4(2). How to Provide Feedback: SEBI is inviting public comments on these proposed amendments until August 18, 2024. Feedback can be submitted via a web-based public comments form or through email at [email protected]. These proposed changes represent SEBI's commitment to refining the regulatory framework for insider trading, ensuring it remains robust and inclusive. For detailed understanding, please refer to the attached consultation paper. #SEBI #PIT JMJA & Associates LLP

Ensuring Responsible Growth: SEBI's upcoming measures for SME IPOs “There are pockets of froth in the market.” With this statement, the Chairperson of the SEBI highlighted the need for vigilant oversight in our financial markets. In response, SEBI is constantly implementing measures to prevent potential exploitation by various stakeholders. The latest one is the direction issued by SEBI to the stock exchanges to be extra cautious while approving SME IPOs. Who are SMEs? SMEs are defined based on their investment in plant and machinery & their annual turnover, as regulated by the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. What is an SME IPO? Similar to regular IPOs, SME IPOs are launched by Small & Medium Enterprises to raise capital from the public & list their shares on the stock exchanges. After the IPO, SME stocks are traded on the stock exchange, enabling public investors to buy shares & acquire ownership stakes in these SMEs. Launched in 2012 through the NSE Emerge & BSE platform, the SME segment has provided small businesses an opportunity to raise capital through public offerings. Since 2020, SME IPOs have experienced remarkable YoY growth of 24%, 84%, & 66%, respectively. In 2023 alone, these offerings raised approx. ₹4,967 cr, with projections indicating that 2024 figures will surpass this by September. SEBI's proactive approach has led to the enhancement of due diligence processes. Stock exchanges are now required to ask additional questions regarding the objectives of the issue & the capital expenditure plans of the companies. These measures aim to ensure that the funds raised are used responsibly. Current Criteria: -A company must have been in operation for at least 3 years. -The post-issue paid-up capital should not exceed ₹25 crores. -The company should have a track record of at least 3 years. -The company should have a positive net worth in at least 2 of the last 3 financial years. -The minimum application and trading lot size is ₹1,00,000. -The minimum number of allottees in an SME IPO should be 50. -IPO underwriting is mandatory, with 15% underwritten by a merchant banker. Expected changes: SEBI is currently revising the SME IPO regulations to strengthen eligibility criteria & ensure that only fundamentally strong companies enter the market through the SME platform. The anticipated changes include: - Allowing only cash-flow-positive companies to apply for raising funds via the SME route. - Raising the minimum IPO size & lot size. - Tightening the rules around availing of loans, interest & loan repayments - Providing a flexible timeline for migrating from the SME segment to the main board. Although changes are expected to be announced by the end of this year, which has slowed the pace of approvals for SME IPOs, these measures are intended to promote responsible growth and ensure that the SME platform remains a robust and reliable avenue for raising capital. #SEBI #IPOs #MSME JMJA & Associates LLP

Unliquidated Investments? SEBI brings resolution for VC Funds. In May 2024, SEBI introduced a consultation paper proposing amendments to the SEBI (Alternative Investment Funds) Regulations, 2012 (‘AIF Regulations’). These amendments aim to provide Venture Capital Funds (VCFs), registered under the erstwhile SEBI (Venture Capital Funds) Regulations, 1996 (‘VCF Regulations’), the option to migrate to the AIF Regulations. This migration offers flexibility for dealing with unliquidated investments upon the expiry of a scheme's tenure. Following this proposal, SEBI issued the Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2024. The key points of these regulations include: 1. Eligibility Criteria for Applicants: -Must hold a certificate of registration as a Venture Capital Fund under the SEBI (Venture Capital Funds) Regulations, 1996, and comply with applicable regulations. -Must have no pending investor complaints regarding non-receipt of funds or securities for any of its unliquidated schemes. -No scheme should have investments from any investor less than INR 5 lakh, and each scheme must have firm commitments from investors amounting to at least INR 5 crore before starting operations. 2. Regulations for Investment in Migrated VC Funds: -Migrated VC funds cannot publicly invite offers for subscription or purchase of units, only receiving investment monies through private placements. -They must issue a placement memorandum or enter into a contribution/subscription agreement with investors, detailing trustees, fund manager tax implications, maturity period, investment strategy, etc. 3. Regulations for Investment by Migrated VC Funds: -Cannot launch new schemes. -Must not invest more than 25% of the fund's corpus in a single venture capital undertaking. -Must avoid investing in associated companies. -At least 66.67% of funds must be invested in unlisted equity or equity-related instruments. 4. Additional Restrictions: -The tenure of migrated VC Funds will be specified by SEBI, with possible extensions of up to two years. -Listing is prohibited for three years from the date of unit issuance. -Migrated VC Funds must maintain records for eight years from the end of their tenure. These regulatory changes aim to streamline the management of unliquidated investments and ensure compliance and transparency within the venture capital sector. #SEBI #AIFs #VCFunds #EODB JMJA & Associates LLP CLUe by JMJA

Unliquidated Investments? SEBI brings resolution for VC Funds. In May 2024, SEBI introduced a consultation paper proposing amendments to the SEBI (Alternative Investment Funds) Regulations, 2012 (‘AIF Regulations’). These amendments aim to provide Venture Capital Funds (VCFs), registered under the erstwhile SEBI (Venture Capital Funds) Regulations, 1996 (‘VCF Regulations’), the option to migrate to the AIF Regulations. This migration offers flexibility for dealing with unliquidated investments upon the expiry of a scheme's tenure. Following this proposal, SEBI issued the Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2024. The key points of these regulations include: 1. Eligibility Criteria for Applicants: -Must hold a certificate of registration as a Venture Capital Fund under the SEBI (Venture Capital Funds) Regulations, 1996, and comply with applicable regulations. -Must have no pending investor complaints regarding non-receipt of funds or securities for any of its unliquidated schemes. -No scheme should have investments from any investor less than INR 5 lakh, and each scheme must have firm commitments from investors amounting to at least INR 5 crore before starting operations. 2. Regulations for Investment in Migrated VC Funds: -Migrated VC funds cannot publicly invite offers for subscription or purchase of units, only receiving investment monies through private placements. -They must issue a placement memorandum or enter into a contribution/subscription agreement with investors, detailing trustees, fund manager tax implications, maturity period, investment strategy, etc. 3. Regulations for Investment by Migrated VC Funds: -Cannot launch new schemes. -Must not invest more than 25% of the fund's corpus in a single venture capital undertaking. -Must avoid investing in associated companies. -At least 66.67% of funds must be invested in unlisted equity or equity-related instruments. 4. Additional Restrictions: -The tenure of migrated VC Funds will be specified by SEBI, with possible extensions of up to two years. -Listing is prohibited for three years from the date of unit issuance. -Migrated VC Funds must maintain records for eight years from the end of their tenure. These regulatory changes aim to streamline the management of unliquidated investments and ensure compliance and transparency within the venture capital sector. #SEBI #AIFs #VCFunds #EODB JMJA & Associates LLP CLUe by JMJA

#Budget2024 - announcement regarding IBC and Corporate Laws. - Integrated technology platform to be set up for improving the outcomes under Insolvency & Bankruptcy Code - Services of Centre for Processing Accelerated Corporate Exit (C-PACE) to be extended for voluntary closure of LLPs - Debt recovery tribunals to be strengthened & additional tribunals to be established to speed up recovery

Team JMJA wishes everyone a Shubh #GuruPurnima! In India, we not only remember our gurus with heartfelt gratitude, but we also dedicate this special day to honor them. Our gurus and teachers guide us on the right path in life, and today we celebrate their invaluable contributions. As a team, we are in the constant process of learning, and today we want to say thank you to everyone who has guided and inspired us. #Gurupurnima #gratitute CS Anupriya Saxena CS Jigar Shah CS Mansi Damania

SEBI has enabled Credit Rating Agencies (CRA) and ESG Rating Providers (ERP) to undertake rating activities under IFSCA. #SEBI on Friday, July 19, 2024, issued 2 circulars enabling Credit Rating Agencies (CRAs) and ESG Rating Providers (ERPs) to undertake activities under #IFSCA. To enable CRA and ERP to undertake activities at the International Financial Services Centre -Gujarat International Finance Tech-city (IFSC-GIFT City), International Financial Services Centres Authority (IFSCA), SEBI has added it to the list of financial sector regulators/ authorities as specified in respective master circulars. The respective circulars clarified that any issue arising from the activities of such SEBI registered CRAs or ERPs, as the case maybe, in the IFSC shall be dealt with by IFSCA under the powers exercisable under IFSCA Act and regulations and subsidiary instructions made thereunder. The respective circulars further empowered IFSCA for dealing with complaints, enforcement actions and furnishing information to third parties, including statutory or judicial bodies, in respect to the services provided by the CRAs or ERPs, as the case maybe, in the IFSC. Link for SEBI Circular: 1. CRA : https://lnkd.in/dHK8ntJ8 2. ERP: https://lnkd.in/dqumFTJK JMJA & Associates LLP #CLUe #ESG Mansi, Anupriya

At JMJA, we believe in continuous learning and professional growth. Last week our dedicated team members CS Mansi Damania CS Rinku Kholakiya Saudhamini I. had participated in 'Manthan 2024- A unique 2 days workshop on Critical Issues in Corporate Laws' organised by Mysuru Chapter of #ICSI. Our commitment to fostering a culture of learning ensures that our team remains at the forefront of industry advancements. We can't wait to see the knowledge they bring back to further elevate our performance and service to our clients. Thanks to the Mysuru Chapter, ICSI for organizing this valuable opportunity, and to our employees for their unwavering dedication to personal and professional development. #ICSI #Manthan2024 #TeamJMJA

This week I got an opportunity to share my thoughts on Social Media Branding for Professionals and use of #AI at #Bhilwara chapter of the The Institute of Chartered Accountants of India. In today's digital age, effectively leveraging social media platforms is crucial for building a personal brand that stands out. During the session, we not only discussed the Strategies for creating a compelling online presence but also Best practices for engaging with the audience. Also, we briefly touched upon the role of #AI in enhancing social media efforts. A big thank you to CA Sonesh Kabra, Chairman and the entire team of the #Bhilwara chapter for hosting an exciting event and to all the participants for their enthusiastic engagement. Let's continue to harness the power of social media and AI to build stronger, more dynamic professional networks. #DigitalBranding

Certification course for Investors by SEBI: Just two days ago, NIFTY soared to its all-time high, marking another milestone in the stock market's thrilling ascent. Every day, the market reaches new peaks, drawing in a surge of influencers and a flood of investment advice videos. But amid the excitement, one truth remains: investing in the stock market carries inherent risks. Market volatility is a constant, and history is full of tales of individuals who fell victim to fraud. The common thread? A booming market lures investors who often lack a deep understanding of its complexities and risk factors. To address this, SEBI launched an initiative on June 11, 2024: the first-ever investor certification exam aimed at boosting financial literacy. This voluntary, free exam offers a comprehensive education in stock market investing. Participants will gain insights into government schemes, the roles of stock exchanges, depositories, and regulatory bodies, as well as essential risk management concepts like hedging and diversification. Developed in collaboration with the National Institute of Securities Markets (NISM), this certification offers to equip investors with the knowledge they need to navigate the market wisely. Curious to learn more? Check out the details here: https://lnkd.in/ghw4NQMC and Read the FAQs for more info: https://lnkd.in/gJwek5wa #SEBI #investorawareness #investorprotection JMJA & Associates LLP CLUe by JMJA