Transique Corporate Advisors’ Post

#SEBI #InvestmentAdvisor The preamble of 𝐒𝐄𝐁𝐈 𝐀𝐜𝐭, 𝟏𝟗𝟗𝟐 and its 𝐒𝐞𝐜𝐭𝐢𝐨𝐧 𝟏𝟏(𝟏) clearly states the intent and purpose of SEBI i.e. a) Protect the interest of investors b) Promotion and development of the Securities market c) Regulation of Securities Market To attain these purposes, SEBI can take various measures, out of which one is to make regulations on various matters. Further, 𝐬𝐞𝐜𝐭𝐢𝐨𝐧 𝟑𝟎 empowers SEBI to make regulations. 𝐒𝐞𝐜𝐭𝐢𝐨𝐧 𝟏𝟏 (𝟐) (𝐛) 𝐚𝐧𝐝 (𝐛𝐚) gives power to SEBI to register and regulate Intermediaries of the Securities market. SEBI has notified regulations for these intermediaries like Brokers, Investment Advisors, RTA, Portfolio Managers, etc. The regulations define the activities of these intermediaries and set the regulatory framework for their operations. 𝐒𝐞𝐜𝐭𝐢𝐨𝐧 𝟏𝟐 (𝟏) 𝐚𝐧𝐝 (𝟏𝐀) read with Regulation 3(1) of these respective Intermediaries' regulations mandate the registrations with SEBI before the commencement of the activities and to act as an Intermediary. The image attached to this post is from a SEBI order wherein the Scheme and Intent of the Investment Advisor Regulations are articulated. These are: a) protect the interest of the investor b) maintain the integrity of the market c) provide appropriate safeguards to ensure that the investors are saved from the claws of the Investment Advisors who do not act within the four walls of IA Regulations. Some of the mandatory provisions of IA Regulations are as follows: a) Registration with SEBI b) Qualification and Certification Requirements c) Prior Risk profiling of clients to ensure the suitability of Investment Advise d) Prior entering into the agreement with clients & KYC e) Ensure that its investment advisory services are clearly segregated from all its other activities f) Redressal of client grievances g) Not to enter into transactions contrary to the advice h) Act in a fiduciary capacity and not render advice in a reckless manner i) Abide by the Code of Conduct 𝑯𝒆𝒏𝒄𝒆, 𝒂𝒑𝒂𝒓𝒕 𝒇𝒓𝒐𝒎 𝒓𝒆𝒈𝒊𝒔𝒕𝒓𝒂𝒕𝒊𝒐𝒏, 𝒕𝒉𝒆𝒓𝒆 𝒂𝒓𝒆 𝒐𝒕𝒉𝒆𝒓 𝒑𝒓𝒐𝒗𝒊𝒔𝒊𝒐𝒏𝒔 𝒇𝒓𝒐𝒎 𝒕𝒉𝒆 𝑰𝑨 𝑹𝒆𝒈𝒖𝒍𝒂𝒕𝒊𝒐𝒏𝒔 𝒂𝒏𝒅 𝑴𝒂𝒔𝒕𝒆𝒓 𝑪𝒊𝒓𝒄𝒖𝒍𝒂𝒓 𝒕𝒉𝒂𝒕 𝒐𝒏𝒆 𝒏𝒆𝒆𝒅𝒔 𝒕𝒐 𝒃𝒆 𝒎𝒊𝒏𝒅𝒇𝒖𝒍 𝒐𝒇 𝒘𝒉𝒊𝒍𝒆 𝒄𝒂𝒓𝒓𝒚𝒊𝒏𝒈 𝒐𝒖𝒕 𝒕𝒉𝒆 𝑰𝒏𝒗𝒆𝒔𝒕𝒎𝒆𝒏𝒕 𝑨𝒅𝒗𝒊𝒔𝒐𝒓𝒚 𝒂𝒄𝒕𝒊𝒗𝒊𝒕𝒊𝒆𝒔. 𝙎𝙀𝘽𝙄'𝙨 𝙋𝙧𝙚𝙨𝙨 𝙍𝙚𝙡𝙚𝙖𝙨𝙚 𝙤𝙣 4𝙩𝙝 𝙊𝙘𝙩𝙤𝙗𝙚𝙧'23 on Working Groups to recommend on simplification, ease of compliance and reduction in cost of compliance; suggests that it is also considering the interest of Intermediaries; particularly the Investment Advisors who have seen multiple circulars affecting their operations like cap on advance and setting the maximum amount of advisory fees, Advertisement code, enhanced reporting requirements, etc. A KANKANI AND ASSOCIATES, PRACTICING COMPANY SECRETARIES Prakhar Godre Muskan Kadiwar Mayank Arora

SEBI: IMPOSES 5-YEAR BAN, RS. 30 LAKH PENALTY ON IA WEALTHIT GLOBAL’S OWNER FOR MISLEADING INVESTORS SEBI imposes a penalty of Rs. 30 lakh on Investment Adviser (IA) Wealthit Global’s Proprietor Mohit Manghnani (Noticee), as also debars him from accessing the securities market and associating as a director or key managerial personnel with any listed public company for 5 years, for misleading clients with promised assured returns and inducing them to subscribe to various packages offered by the IA; During the investigation, SEBI observed various violations by the Noticee viz. – (i) failure to renew his NISM registration, (ii) non-compliance with SEBI directions during inspection and deceiving clients, (iii) non-communication of risk profiling and suitability assessment of clients, (iv) non-redressal of investor grievance as well as violation of PFUTP Regulations, and (v) selling multiple and non-suitable services and charging exorbitant/unrealistic fees; Against Noticee’s submission that he had no intention to not cooperate with SEBI’s investigation and that he had stopped IA’s operations after 6 months of the expiry of the certificate, SEBI remarks that it cannot be a valid defence, as the requirement of the NISM certificate flows statutorily from the IA Regulations, moreover, Noticee has acted in complete disregard to its fiduciary responsibility towards its clients, since his IA firm had actually misguided/unduly influenced clients to buy the investment products; Further, considering that misleading promises induced the clients to invest in the schemes/packages/services offered by the Noticee, thereby exposing the clients to risk, Regulator finds that the Noticee has been found guilty of giving advice not suitable to the risk profile of the clients, and highlights that, not doing the risk profiling properly, promising assured returns, amounts to acts which may be knowingly designed to influence the decision of investors; Lastly, SEBI iterates that “…any promise of assured returns and profits is inherently misleading as it runs contrary to fundamental principles of the securities market i.e., investments are subject to market risks.”, and noting that 53 complaints are pending against the Noticee since 2018 for resolving which he has not taken any steps whatsoever, Market Regulator concludes that the Noticee has also violated Reg. 21(1) of IA Regulations, and directs the Noticee to resolve all complaints received through SEBI’s SCORES portal within 3 months:SEBI The order was passed by Mr. Anand R. Baiwar (Executive Director).

SEBI SCORES platfrom for Investors grievances redressal. 🔹SEBI has introduced SCORES platform for investor grievances redressal. SCORES stands for 'SEBI Complaints Redress System.' SCORES provide a platform, overseen by SEBI through which investor can approach to listed entity or SEBI registered intermediaries for the speedy redressal of their grievances, pertaining to securities marktet which remains unsolved by listed entity or SEBI registered intermediaries after a direct approach. 🔹Investor shall directly approach to listed entity or intermediaries for their complaint redreessal. In case, listed company or registered intermediary fails to redress the complaint to the investor’s satisfaction, the investor may file a complaint in SCORES. 🔹Investors who wish to lodge a complaint on SCORES are requested to register themselves on www.scores.gov.in 📌Entities against which complaints can be made: 👉Listed companies / registrar & transfer agents Brokers / stock exchanges 👉Depository participants / depository 👉Mutual funds 👉Portfolio Managers 👉Other entities (KYC Collective investment scheme, Merchant banker, Credit rating, Foreign institutional investor etc) 📌Types of complaints are not dealt through SCORES: i. Complaints against the companies which are unlisted/delisted, in dissemination board of Stock Exchanges, ii. Complaints those are sub-judice i.e. relating to cases which are under consideration by court of law, quasi-judicial proceedings etc. iii. Complaints falling under the purview of other regulatory bodies viz. RBI, IRDAI, PFRDA, CCI, etc., or under the purview of other ministries viz., MCA, etc. iv. Complaints against a sick company or a company where a moratorium order is passed in winding up / insolvency proceedings. v. Complaints against the companies where the name of company is struck off from RoC or a vanishing company as per list published by MCA. vi. Suspended companies, companies under liquidation / BIFR / etc. 📌 As per Regulation 13 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 👉The listed entity shall redress investor grievances promptly but not later than twenty-one calendar days from the date of receipt of the grievance and in such manner as may be specified by the Board. 👉The listed entity shall ensure that it is registered on the SCORES platform or such other electronic platform or system of the Board as shall be mandated from time to time, in order to handle investor complaints electronically in the manner specified by the Board.

Hi guys. Considering that most of the people in my followers are either in colleges or work, I'm planning on starting a new series, wherein I provide theoretical information on topics that you may come across during your journey as students or working professionals. Today's topic is SEBI (Securities and Exchange Board of India) Structure of SEBI • SEBI formed with all functional autonomy under the SEBI Act, 1992 • The central Govt. is empowered to supersede the SEBI in public interest or if on account of grave emergency • The SEBI is a body of eight members comprising the chairman, three full time members, one part time member and two officials of the ministries of the central government dealing with finance and law, and one member from the RBI. • All members, except the RBI member, are appointed by the Government Major Functions of SEBI • To protect the interests of investors in securities and to promote the development of, and to regulate the securities market. • To regulate the business in stock exchanges. • To register and regulate the working of stockbrokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers, etc. • To register and regulate the working of the depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies, etc. • To register and regulate the working of venture capital funds and collective investment schemes, including mutual funds. • To promote and regulate self-regulatory organisations. To prohibit fraudulent and unfair trade practices relating to securities markets. • To promote investors' education and training of intermediaries of securities markets. • To prohibit insider trading in securities. • To regulate substantial acquisition of shares and take-over of companies. Committees on Corporate Governance Setup by SEBI • Kumar Mangalam Birla Committee (2000) • Introduction of Clause 49 of the Listing Agreement to be complied with by all listed companies • The board of a company should have an optimum combination of executive and non-executive directors with not less than 50% of the board comprising the non-executive directors. • The disclosures should be made in the section on corporate governance of the annual report • N.R. Narayana Murthy Committee (2003) • Persons should be eligible for the office of non-executive director so long as the term of office did not exceed nine years (in three terms of three years each, running continuously). • The age limit for directors to retire should be decided by companies themselves. • Audit committee of listed companies shall review mandatorily the information on financial statements, risk management practices, IPOs etc. Hope this information helps you all. Do like and share in case this brings value to your life. #SEBI #IPOs #CorporateGovernance #Business #FinancialInsitiutions

𝗔𝗥𝗘 𝗦𝗔𝗙𝗘𝘀 𝗥𝗘𝗔𝗟𝗟𝗬 𝗦𝗛𝗔𝗥𝗜𝗔𝗛 𝗖𝗢𝗠𝗣𝗟𝗜𝗔𝗡𝗧? - 𝗣𝗔𝗥𝗧 𝟯 In yesterday's post, I discussed how SAFEs cannot be a Qard. Today, I want to share my personal interpretation and approach to SAFEs for Shariah purposes. SAFEs must be modified for Shariah compliance, as follows: 1️⃣ Ownership A SAFE agreement legally gives the right to future equity. From a Shariah perspective, ownership, at some level, is required for an investor to gain the reward of that investment. Hence, this is the first issue that needs to be addressed in SAFEs and amended. I personally see SAFEs, if rectified as discussed here, to operate as pseudo-shares. SAFEs can be restructured to operate as vehicles to give the SAME economic benefits to SAFE holders as that of equity holders. Management/voting are not necessary for Shariah, the economics are. As long as SAFE holders are treated on par with equity holders in terms of liquidation/dividend income, then, SAFEs are just another vehicle to gain economic benefits from the equity of a company. SAFE holders can be seen as beneficial owners if the SAFE is structured as such. Nominee structures effectively do the same, so do phantom shares and shadow stocks. The concept exists. I mean, even in actual shares, a shareholder does not own the assets legally, the company does. A shareholder simply has rights. A similar concept can be developed via the vehicle of SAFEs. For Shariah compliance, the names are not key, rather the economic benefits, rights, and relationships. 2️⃣ Preference SAFE Shares The second Shariah concern in SAFEs are priority and preferred stocks. SAFEs typically provide that, upon a dissolution or winding-up of the company (which is not in connection with a sale of the company), the SAFE holders are entitled to receive the purchase price of their SAFEs before the ordinary/common equity holders receive any distribution of the company’s residual assets. A Shariah Compliant SAFE should avoid any preferential treatment to SAFE investors. This ensures that for Shariah purposes, the SAFE investors are ranked pari passu with equity shareholders. These should be altered in "SAFE Ordinary Shares". 3️⃣ Ambiguity This is not a deal breaker, and may be overlooked in certain cases. It is a nice-to-have, nevertheless. There is ambiguity and uncertainty in: a. Time of conversion b. Valuation at conversion The conversion to legal equity is unknown and contingent on trigger events. Likewise, there is uncertainty over the valuation at which the conversion will occur. a. Compulsory conversion Time limit – A SAFE should state an absolute end date by which the conversion into equity is exercised. b. Valuation Cap – This ensures that the SAFE will convert into a minimum percentage of the company. CAUTION Always have a Shariah advisor onboard to ensure that your SAFE is actually Shariah compliant. That cannot be overstressed!

SEBI wants more transparency from India's business conglomerates In its annual report SEBI indicates it is examining higher disclosure standards for business groups with complex structures involving listed and unlisted companies. 'While listed entities are subject to comprehensive disclosure requirements, the same levels of disclosures requirements are not applicable to unlisted companies. Therefore, there is a need to identify, monitor and manage the risks introduced into the securities market ecosystem by unlisted companies in a conglomerate with a complex set of listed and unlisted associates. SEBI plans to facilitate transparency around the conglomerate by enhancing the group level reporting of transactions. Disclosure of details of cross holding and material financial transactions within the conglomerate are also some of the matters that SEBI would examine to be disclosed on an annual basis.' Among the other agenda items for FY24.... ◾Harmonization of disclosure requirements under LODR and ICDR ◾Conglomerate Disclosures ◾Digital Assurance of financial statements ◾Pricing mechanism in case of delisting ◾Review of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ◾Revamp of approach for supervision of MIIs ◾External performance evaluation of MIIs and its Statutory Committees ◾Trading supported by Blocked Amount ◾Instantaneous Settlement ◾Introduction of Regulatory Framework for Index Providers ◾Review of Eligibility Criteria of Stock Derivatives ◾Two-way portability across the Clearing Corporations ◾Price band formulation for scrips in Equity Derivatives segment ◾Norms for dealing with unclaimed funds of clients ◾Upstreaming of clients’ funds ◾Mechanism for prevention and detection of fraud or market abuse ◾Voting for shareholder proposals through broker website/apps ◾Introduction of the Mutual Fund Lite Regulations ◾Review of Total Expense Ratio ◾CDS selling by Mutual funds ◾Institutional accountability of individual misconduct ◾Increasing transparency of portfolio managers including performance benchmarking ◾Standardized approach to valuation of investment portfolio of AIFs ◾Option to AIFs to sell unliquidated investments of a scheme ◾Issuance of units of AIFs in dematerialized form ◾Corporate Bond Markets - Voluntary Delisting ◾ESG Ratings ◾Review of the definition of Unpublished Price Sensitive Information ◾Review of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ...among other things. 😵 Read the annual report here https://lnkd.in/dP5tNqUs #regulation #securitieslaw #sebi

On Monday, the FCA published a paper outlining their findings from a review of the progress of multiple firms on ICARA under IFPR. Included within this they highlighted a number of areas for improvement as follows: - Some firms lacked sufficient cashflow and liquidity stress consideration, risking cash depletion. - Internal intervention points for most firms lacked structured triggers to timely mitigate harm. - Wind-down assessments inadequately considered the impact of group membership. - Certain firms had significant operational risk capital model failings, raising concerns about resource adequacy. Click here to see the full paper https://lnkd.in/eMfZXzXU Please get in touch with us should you wish to discuss, how ISC Ltd can help you reg-change@iscltd

The Ministry of Corporate Affairs (MCA) vide its notification dated 27-10-2023 has extended the requirement of dematerialisation of securities to private companies. As per the said MCA Notification every private company other than Small Company (Small Company means a company with Paid-up-capital not exceeding Rs.4 Crore and Turnover not exceeding Rs.40 Crore) as on 31-03-2023 who intends: - to make any offer for Issue of any securities - buyback of securities - issue of bonus shares /rights shares on or after 30-09-2024, shall before making any such offer ensure that the entire holding of securities of its promoters, directors and KMP has been dematerialised. Further Every holder of securities of private companies (other than small company) who intends: - to transfer such securities on or after 30-09-2024 shall get its securities dematerialised before the transfer. - to subscribe for the rights issue/bonus issue/rights issue or buyback of securities on or after 30-09-2024 shall get its existing securities dematerialised before the subscribing for securities. If your company is falling in the above criteria, you are advised to approach a Depository Participant and obtain ISIN (International Securities Identification Number) for shares of your company and ensure dematerialisation of shares of promoters, directors and KMP of your company. Regards Rajendra Prasad Gangula Archana Gangula www.grprasad.com