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Friday, August 6, 2010

What exam for approved users & sales personnel of trading members in currency derivatives segment and trading in interest rate derivatives, register for NISM now

Notification No. LAD-NRO/GN/2010-11/12/10230 dated 29th June 2010 under regulation 3 of the Securities and Exchange Board of India (Certification of Associated Persons in the Securities Markets) Regulations, 2007
WHEREAS the National Institute of Securities Markets (hereinafter referred to as NISM) has issued a communiqué no. NISM/Certification/Series-IV:IRD/2010/1 dated May 18, 2010, on “NISM-Series-IV: Interest Rate Derivatives Certification Examination” (hereinafter referred to as ‘the Series-IV: IRD’) for approved users and sales personnel of the trading members who are registered as such in the currency derivatives segment of a recognized stock exchange and trading in interest rate derivatives.

NOW THEREFORE the Securities and Exchange Board of India approves the Series-IV: IRD, as issued by NISM vide aforesaid communiqué, as the required certification for approved users and sales personnel of the abovementioned trading member for the purpose of sub-regulation (2) of regulation 16L of the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 read with Circular No. SEBI/DNPD/Cir-46/2009 dated August 28, 2009.

NOW THEREFORE such trading member shall ensure that all its existing approved users and sales personnel obtain Series-IV: IRD certification within 2 years from the date of this notification.

FURTHER such trading member shall ensure that every approved user and sales personnel employed by it after the date of this notification, obtains Series-IV: IRD certification within 1 year from the date of employment.

Registration:

What exam for distributors, agents or any persons employed or engaged or to be employed or engaged in the sale and/or distribution of mutual fund products by SEBI NISM?

Cir / IMD / DF / 5 / 2010 June 24 , 2010
All Mutual Funds, Asset Management Companies (AMCs)

Sub: Certification Programme for sale and/ or distribution of mutual fund products

In terms of SEBI Circulars dated September 25, 2001, November 28, 2002, April 03, 2003 and February 04, 2004 about, inter alia, the captioned subject, agents/distributors of mutual fund units were required to obtain certification from the Association of Mutual Funds in India (AMFI) by passing a certification examination, and to obtain registration with AMFI.

In terms of SEBI notification No. LAD-NRO/GN/2010-11/09/6422 dated May 31, 2010, under regulation 3 (1) of the (Certification of Associated Persons in the Securities Markets) Regulations, 2007, (Certification Regulations) it has been decided that from June 01, 2010, the certification examination for distributors, agents or any other persons employed or engaged or to be employed or engaged in the sale and/or distribution of mutual fund products, would be conducted by the National Institute of Securities Markets (NISM).  Accordingly, it was notified that with effect from June 01, 2010, the following category of associated persons, i.e., distributors, agents or any persons employed or engaged or to be employed or engaged in the sale and/or distribution of mutual fund products, shall be required to have a valid certification from the National Institute of Securities Markets (NISM) by passing the certification examination as mentioned in the NISM communiqué NISM/Certification/Series-V-A: MFD/2010/01 dated May 05, 2010.
Provided that if the said associated person possesses a valid certificate by passing before June 01, 2010, the AMFI Mutual Fund (Advisors) Module, he shall be exempted from the requirement of the aforementioned NISM certification examination.


Under the existing instructions, the agent/ distributor was exempted from the AMFI certification examination if he had completed 50 years of age and had at least 5 years of experience in distribution of mutual fund units. As per regulation 4 (3) of the Certification Regulations, persons who have attained the age of fifty years or who have at least ten years experience in the securities markets in the sale and/ or distribution of mutual fund products as on May 31, 2010, will be given the option of obtaining the certification either by passing the NISM certification examination or qualifying for Continuing Professional Education (CPE) by obtaining such classroom credits as may be specified by NISM from time to time.

The Certification Regulations require the persons referred to in para 2 above to comply with the requirements for CPE as specified by NISM within the validity period of the certificate obtained by passing the certification examination.
However, to facilitate the transition process from AMFI to NISM, it has been decided that a person holding a valid AMFI certification whose validity expires between June 01, 2010 and December 31, 2010, would be required to comply with the CPE requirements as laid down by NISM under the relevant clauses of the Certification Regulations, by December 31, 2010.

An associated person holding a valid AMFI/NISM certification whose validity
expires anytime after December 31, 2010, would be required to comply with the CPE requirements as laid down by NISM under the relevant clauses of the Certification Regulations, prior to the expiry of the validity of the certification.

NSE website link of QIP offer documents with shareholding pattern as filed under Clause 35 format

Sub: Disclosure of details of the allottees in the Qualified Institutional Placements (QIP) made by issuer company

SEBI has decided that the details of allottees and the corresponding pre and post QIP issue shareholding in the issuer company may be disclosed on the website of the stock exchanges. Accordingly, this circular is issued in exercise of powers conferred by sub-section (1) of Section 11 of the Securities and Exchange Board of India Act, 1992, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.   Ensure that the details of those allottes in QIP who have been allotted more than 5% of the securities offered in the QIP, viz names of the allottees and number of securities allotted to each of them, pre and post issue shareholding pattern of the issuer in the format specified in clause 35 of the Equity Listing Agreement shall be made available on the website of stock exchanges along with the final placement document.

Source: SEBI/CFD/DIL/LA/1/2010/05/03 dated 5th March 2010

Hence, the new disclosures can be found at

http://www.nseindia.com/content/equities/jp_qipfinal_new.htm

Thursday, August 5, 2010

Issue of Debt Securities now has Non-Convertible Debentures (Reserve Bank) Directions, 2010 in addition to compliance under Companies Act & SEBI regulation

Reporting of Issuance of Non Convertible Debentures

The Reserve Bank of India has issued the ‘Issuance of Non-Convertible Debentures (Reserve Bank) Directions, 2010’ vide IDMD.DOD.9/11.01.01(A)/2009-10 dated June 23, 2010 (which is made effective from 2nd August 2010) regarding regulation of non-convertible debentures of maturity up to one year (NCDs). In terms of paragraph 12.7 of the said Directions read with paragraphs 12.4, 12.5 and 12.6 ibid, the Debenture Trustees are required to report the details of issuance of the NCDs, the outstanding amount of NCDs and default in repayment of NCDs to the Financial Markets Department, Reserve Bank of India, Central Office, Mumbai 400 001.

It is advised to submit the required information as per format enclosed in

  1. Annex 1 (details of issuance of NCDs),
  2. Annex 2 (outstanding amount of NCDs), and
  3. Annex 3 (particulars of default in repayment of NCDs) to the Chief General Manager, Financial Markets Department, Reserve Bank of India, Central Office, Fort Mumbai 400 001 (Fax: 022-22630981/22634824; e-mail).
  4. The required information may be submitted in hard as well as soft copies.
  5. While the report on issuance of NCDs may be submitted within 3 days from the date of completion of the issue and
  6. the report on default in repayment may be submitted immediately,
  7. the report on outstanding amount of NCDs may be submitted on quarterly basis within five working days from the completion of the calendar quarter to which the report pertains.

Issuance of Non-Convertible Debentures (Reserve Bank) Directions, 2010 – An Understanding:

The Reserve Bank of India, having considered it necessary in public interest and to regulate the financial system of the country to its advantage, in exercise of its powers conferred under sections 45K, 45L and  45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, hereby gives to the agencies dealing in securities and money market instruments, the following directions for issuance of Non-Convertible Debentures (NCDs) of original or initial maturity up to one year.

Definition: Non-Convertible Debenture (NCD) means a debt instrument issued by a corporate (including NBFCs) with original or initial maturity up to one year and issued by way of private placement;

“Corporate” means a company as defined in the Companies Act, 1956 (including NBFCs) and a corporation established by an act of any Legislature.

Eligibility to issue NCDs
A corporate shall be eligible to issue NCDs if it fulfills the following criteria, namely,

  1. the corporate has a tangible net worth of not less than Rs.4 crore, as per the latest audited balance sheet;
  2. the corporate has been sanctioned working capital limit or term loan by bank/s or all-India financial institution/s; and
  3. the borrowal account of the corporate is classified as a Standard Asset by the financing bank/s or institution/s.

Rating Requirement
An eligible corporate intending to issue NCDs shall obtain credit rating for issuance of the NCDs from one of the rating agencies, viz., the Credit Rating Information Services of India Ltd. (CRISIL) or the Investment Information and Credit Rating Agency of India Ltd. (ICRA) or the Credit Analysis and Research Ltd. (CARE) or the FITCH Ratings India Pvt. Ltd or such other agencies registered with Securities and Exchange Board of India (SEBI) or such other credit rating agencies as may be specified by the Reserve Bank of India from time to time, for the purpose.
The minimum credit rating shall be P-2 of CRISIL or such equivalent rating by other agencies.

The Corporate shall ensure at the time of issuance of NCDs that the rating so obtained is current and has not fallen due for review.

Maturity

  • NCDs shall be issued for maturities of 90 days or more from the date of issue.
  • The exercise date of option (put/call), if any, attached to the NCDs shall fall after the period of 90 days from the date of issue.
  • The tenor of the NCDs shall not exceed the validity period of the credit rating of the instrument.

Denomination
NCDs may be issued in denominations with a minimum of Rs.5 lakh (face value) and in multiples of Rs.1 lakh.

Limits and the Amount of Issue of NCDs

  1. The aggregate amount of NCDs issued by a corporate shall be within such limit as may be approved by the Board of Directors of the corporate or the quantum indicated by the Credit Rating Agency for the rating granted, whichever is lower.
  2. The total amount of NCDs proposed to be issued shall be completed within a period of 2 weeks from the date on which the corporate opens the issue for subscription.

Procedure for Issuance

  1. The corporate shall disclose to the prospective investors, its financial position as per the standard market practice.
  2. The auditors of the corporate shall certify to the investors that all the eligibility conditions set forth in these directions for the issue of NCDs are met by the corporate.
  3. The requirements of all the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, or any other law, that may be applicable, shall be complied with by the corporate and shall also comply with Debt Listing Agreement.
  4. The Debenture Certificate shall be issued within the period prescribed in the Companies Act, 1956 or any other law as in force at the time of issuance. 
  5. NCDs may be issued at face value carrying a coupon rate or at a discount to face value as zero coupon instruments as determined by the corporate.

Debenture Trustee

  • Every corporate issuing NCDs shall appoint a Debenture Trustee (DT) for each issuance of the NCDs.
  • Any entity that is registered as a DT with the SEBI under SEBI (Debenture Trustees) Regulations, 1993, shall be eligible to act as DT for issue of the NCDs only subject to compliance with the requirement of these Directions.
  • The DT shall submit to the Reserve Bank of India such information as required by it from time to time.

Investment in NCD
NCDs may be issued to and held by individuals, banks, Primary Dealers (PDs), other corporate bodies including insurance companies and mutual funds registered or incorporated in India and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs).

  • Investments in NCDs by Banks/PDs shall be subject to the approval of the respective regulators.
  • Investments by the FIIs shall be within such limits as may be set forth in this regard from time to time by the SEBI.

Preference for Dematerialisation

While option is available to both issuers and subscribers to issue/hold NCDs in dematerialised or physical form, they are encouraged to issue/ hold NCDs in dematerialised form. However, banks, FIs and PDs are required to make fresh investments in NCDs only in dematerialised form.

Roles and Responsibilities

12.1 The role and responsibilities of corporates, DTs and the credit rating agencies (CRAs) are set out below:

(a) Corporates
12.2 Corporates shall ensure that the guidelines and procedures laid down for issuance of NCD are strictly adhered to.
(b) Debenture Trustees
12.3 The roles, responsibilities, duties and functions of the DTs shall be guided by these regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations,1993, the trust deed and offer document.
12.4 The DTs shall report, within three days from the date of completion of the issue, the issuance details to the Chief General Manager, Financial Markets Department, Reserve Bank of India, Central Office, Fort, Mumbai-400001.
12.5 DTs should submit to the Reserve Bank of India (on a quarterly basis) a report on the outstanding amount of NCDs of maturity up to year.
12.6 In order to monitor defaults in redemption of NCDs, the DTs are advised to report immediately, on occurrence, full particulars of defaults in repayment of NCDs to the Financial Markets Department, Reserve Bank of India, Central Office, Fort, Mumbai-400001, Fax: 022-22630981/22634824.
12.7 The DTs shall report the information called for under para 12.4, 12.5 and 12.6 of these Directions as per the format notified by the Reserve Bank of India, Financial Markets Department, Central Office, Mumbai from time to time.
(c) Credit Rating Agencies (CRAs)
12.8 Code of Conduct prescribed by the SEBI for the CRAs for undertaking rating of capital market instruments shall be applicable to them (CRAs) for rating the NCDs.
12.9 The CRA shall have the discretion to determine the validity period of the rating depending upon its perception about the strength of the issuer. Accordingly, CRA shall, at the time of rating, clearly indicate the date when the rating is due for review.

12.10 While the CRAs may decide the validity period of credit rating, they shall closely monitor the rating assigned to corporates vis-à-vis their track record at regular intervals and make their revision in the ratings public through their publications and website.

Documentary Procedure

  1. Issuers of NCDs of maturity up to one year shall follow the Disclosure Document brought out by the Fixed Income Money Market and Derivatives Association of India (FIMMDA), in consultation with the Reserve Bank of India as amended from time to time.
  2. Violation of the directions will attract penalties, which would include debarring of the entity from the NCD market.

Overriding Clarification on Classification of Manufacture & Service Industries under Micro Small Medium Enterprises Act issued by MSME Ministry

Categorisation of activities under manufacture or service under the MSMED Act, 2006

This always remained as a moot point, while categorising under MSMED Act, which provides different limits (link) for manufacturing and servicing industries.

Now, the Ministry of Micro, Small & Medium Enterprises has given a CLARIFICATION in supersession of all other circulars that:

A)    Activities considered as manufacturing :

  1. (i)                  Medical Equipment and Ayurvedic Product
  2. (ii)                Composite unit of Bacon Processing and Piggery Farm (Piggary Farm without bacon processing shall not be classified either as manufacturing or as service enterprise because this is farming activity)
  3. (iii)               Tobacco Processing
  4. (iv)              Beedi/ Cigarette manufacturing and other tobacco products
  5. (v)                Extraction of Agave Spirit from Agave juice (imported medicinal plant) extraction of Agave
  6. (vi)              Manufacture of Bio-fertilizer

B)     Activities considered as Service :

  1. (i)                  Sanitation Services (Hiring of Septic Tank Cleaner)
  2. (ii)                Clinical Pathological Laboratories and scanning, MRI Tests
  3. (iii)               Hospitals
  4. (iv)              Agri – clinic and Agri – Business
  5. (v)                Restaurants with Bar
  6. (vi)              Canteens
  7. (vii)             Motel industry

The activity “Bee Keeping” is a farming allied activity and therefore, would not be covered in either manufacturing or service activity.

Source: No.5(6)/2/2009-MSME POL dated 21/07/2009

As you know [MSMED]Small Scale Industry definition only under MSMED Act for IDRA too.

To understand all the notifications of industry, read Industries DIPP updates

Violated Foreign Exchange laws: on becoming aware of the contravention, disclose it to RBI to save huge penalty of 2 lakhs or 3 times the amount involved in transaction [Compounding Master Circular]

It has been decided to put in place an updated procedure for compounding of contravention/s under FEMA on the basis of observations made over the last few years on the compounding process on a continuous basis and the experience gained in dealing with compounding applications. The objective is rationalization and streamlining of the process and the procedure for compounding and to enhance transparency and effect smooth implementation of the compounding process. The directions contained in the compounding of contravention/s issued vide A.P. (DIR Series) Circular No.31 dated February 1, 2005 are superseded by this circular vide A.P. (DIR Series) Circular No. 56 dated 28th June 2010 and as provided in Master Circular on Compounding of Contraventions under FEMA, 1999 read with Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules).  Further, Operational checkpoints for submission of a compounding application and the related matters are also given.

 

When an application is made for compounding of a contravention, the RBI would examine the nature of contravention in the following manner:
• whether the contravention is technical and/or minor in nature and needs only an administrative cautionary advice;
• whether the contravention is serious and warrants compounding of the contravention; and
• whether the contravention, prima facie, involves money-laundering, national and security concerns involving serious infringements of the regulatory framework. In such a case, RBI may order necessary investigation.

Investigation by Enforcement Directorate (ED)
If RBI finds that it is necessary for further investigation, it may recommend the matter to the Directorate of Enforcement (DoE) for further investigation. Such action may be initiated under FEMA, 1999 by the Enforcement Directorate or the Anti Money Laundering Authority instituted under the Prevention of Money Laundering Act, 2002 or to any other agencies, as RBI may deem fit.

Time Frame for Disposing of Compounding Application
RBI states that applications for compounding will be disposed of in 180 days. If investigation as aforesaid is necessary, compounding will not take place. The application will be returned to the Applicant.

Factors Considered for determining the compounding fee
• The amount of gain or unfair advantage;
• The amount of loss caused to the exchequer;
• The economic benefits accruing to the contravener due to delayed compliance;
• The repetitive nature of contravention by the contravener;
• The conduct of contravener in disclosure of information; and
• Such other matter in the opinion of RBI will be the factors on the basis of which the application will be examined.

Time Frame for Payment of Compounding Fee
The amount payable by the contravener as per the compounding order should be paid within 15 days from the date of the order. If the contravener fails to pay the said amount then it will be deemed that the contravener has never applied for compounding of offence.

Repeated Offences <= 3years
A similar offence within 3 years of the compounding of the earlier offence shall not be compoundable.  Any second or subsequent contravention committed after the expiry of a period of three years from the date on which the contravention was previously compounded shall be deemed to be a first contravention.


Certificate after Compounding
RBI will issue a certificate to the contravener subject to the conditions of the compounding order after realization of the amount paid as per the compounding order.

Within 12 months of Export of Goods and Software, Realise & Repatriate export Proceeds till 31st March 2011 now with Master Circular

Export of Goods and Software – Realisation and Repatriation of export proceeds – Liberalisation as per A.P. (DIR Series) Circular No.57 dated 29th June 2010

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P.(DIR Series) Circular No.70 dated June 30, 2009 increasing the period of realisation and repatriation to India of the amount representing the full export value of goods or software exported, from six months to twelve months from the date of export, subject to review after one year.

The issue has since been reviewed and it has been decided, in consultation with the Government of India, to extend the above relaxation up to March 31, 2011.

To understand the updated version in this regard: Master Circular on Export of Goods and Services

Money Laundering Amendment 2010 with insertion of explanation along with updated Master Circular

Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Second Amendment Rules, 2010- Obligation of banks as per DBOD. AML. BC. No. 113 /14 .01.001/2009-10 dated 29th June 2010.

In the Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005:-

An explanation is added to "suspicious transaction" definition: In rule 2 in sub-rule (1), after clause (g), the following Explanation shall be inserted, namely:-
"Explanation:- Transaction involving financing of the activities relating to terrorism includes transaction involving funds suspected to be linked or related to, or to be used for terrorism, terrorist act or by a terrorist.

 

Further, in Rule 9, the existing sub-rules (1A,B,C,D) are replaced and some Explanation in added in Rule 10.

For full details, kindly refer the Updated Master Circular – Know Your Customer (KYC) norms / Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002

No surrender of the proportionate export incentives under FTP Export Schemes even if proceeds are not realised within 6/12 months

Export of Goods and Services - Unrealised export bills –Write-off - Surrender of export incentives
Attention of Authorised Dealer Category – I (AD Category –I) banks is invited to A.P. (DIR Series) Circular No. 12 dated September 09, 2000, A.P. (DIR Series) Circular No. 30 dated April 04, 2001, A.P. (DIR Series) Circular No. 61 dated December 14, 2002, A.P. (DIR Series) Circular No. 40 dated December 05, 2003 and A.P. (DIR Series) Circular No. 33 dated February 28, 2007, in terms of which the AD Category –I banks have been permitted to accede to the requests for "write-off" made by the exporters, subject to the conditions, inter alia, that the exporter had to surrender proportionate export incentives, if availed of, in respect of the relative shipments.

 

It has since been announced in the Foreign Trade Policy (FTP) 2009-14 and specified in Para. 2.25.4 of Handbook of Procedures – Vol. I (2009-2014) (extracts annexed), issued by the Department of Commerce, Ministry of Commerce and Industry that realisation of export proceeds shall not be insisted upon, under any of the Export Promotion Schemes under the Foreign Trade Policy (FTP), subject to the following conditions:-
i) the write-off on the basis of merits is allowed by the Reserve Bank or by the AD Category – I banks on behalf of the Reserve Bank, as per the extant guidelines;
ii) the exporter produces a certificate from the Foreign Mission of India concerned, about the fact of non-recovery of export proceeds from the buyer; and
iii) this would not be applicable in self-write-off cases.
The above relaxation is applicable for the exports made with effect from August 27, 2009.

It is clarified that since the Drawback scheme is governed by the provisions of the Customs Act, 1962 and the Rules made there under, the provisions contained in para. 2.25.4 of the Handbook of Procedure – Vol. I. of the Foreign Trade Policy (FTP) (2009-2014) would not be applicable to the Duty Drawback scheme. Therefore, the drawback amount has to be recovered even if the claim is settled by the Export Credit Guarantee Corporation of India Limited (ECGC) or the write –off is allowed by the Reserve Bank.

Accordingly, the AD Category –I banks are advised not to insist on the surrender of the proportionate export incentives, other than under the Duty Drawback scheme, if availed of, by the exporter under any of the Export Promotion Schemes under the FTP 2009-14, subject to the fulfilment of conditions as stated above.

 

Source: A.P. (DIR Series) Circular No.03 dated 22nd July 2010

Takeout Financing: refinancing of domestic Rupee loans with ECB under RBI approval route

As per the extant norms, refinancing of domestic Rupee loans with External Commercial Borrowing (ECB) is not permitted. However, keeping in view the special funding needs of the infrastructure sector, it has been decided to review the ECB policy and put in place a scheme of take-out finance. Accordingly, it has been decided to permit take-out financing arrangement through ECB, under the approval route, for refinancing of Rupee loans availed of from the domestic banks by eligible borrowers in the sea port and airport, roads including bridges and power sectors for the development of new projects, subject to the following conditions:

  1. The corporate developing the infrastructure project should have a tripartite agreement with domestic banks and overseas recognized lenders for take-out of the loan within three years of the scheduled Commercial Operation Date (COD). The scheduled date of occurrence of the take-out should be clearly mentioned in the agreement.
  2. The loan should have a minimum average maturity period of 7 years.
  3. The domestic bank financing the infrastructure project should comply with the extant prudential norms relating to take-out financing.
  4. The fee payable to the overseas lender until the take-out shall not exceed 100 bps per annum.
  5. On take-out, the residual loan agreed to be taken- out by the overseas lender would be considered as ECB and the loan should be designated in a convertible foreign currency and all extant norms relating to ECB should be complied with, including the reporting arrangements.
  6. Domestic banks / Financial Institutions will not be permitted to guarantee the take-out finance and further it will not be allowed to carry any obligation on its balance sheet after the occurrence of the take-out event.

Source: A.P.(DIR Series) Circular No.04 dated 22nd July 2010

Demat Account Suspension for Debit & Credit without PAN - SEBI mandates & enforces strictly now for all electronic shareholdings

Sub: Mandatory requirement of Permanent Account Number (PAN)


1. Please refer to SEBI circular No.MRD/DoP/Cir-05/2007 dated April 27, 2007 making PAN mandatory for all transactions in the securities market.

2. As you are aware, the demat accounts for which PAN details have not been verified are “suspended for debit” until the same is verified with the Depository Participant (DP). However, it has come to our notice that despite follow up, investors are not furnishing the PAN details.

3. In order to ensure better compliance with the Know Your Client (KYC) norms it has been decided that with effect from August 16, 2010 such PAN non-compliant demat accounts shall also be "suspended for credit" other than the credits arising out of automatic corporate actions. It is clarified that other credits including credits from IPO/FPO/Rights issue, off-market transactions or any secondary market transactions shall not be allowed into such accounts.

Source: CIR/MRD/DP/ 22 /2010 dated 29th July 2010

Mutual Fund (MF) ASBA mandatory from 1st October 2010 and not from 1st July

Sub: Additional mode of payment through Applications Supported by Blocked Amount (hereinafter referred to as “ASBA”) in Mutual Funds

ASBA is already available for subscription to public  issue & rights issue of equity and now it is extended to the investors subscribing to New Fund Offers (NFOs) of mutual fund schemes. It shall co-exist with the current process, wherein cheques/ demand drafts are used as a mode of payment. The banks which are in SEBI’s list shall extend the same facility in case of NFOs of mutual fund schemes to all eligible investors in Mutual Fund units. Mutual Funds shall ensure that adequate arrangements are made by Registrar and Transfer Agents (RTA) for the implementation of ASBA. Mutual Funds/AMCs shall make all relevant disclosures in this regard in the SAI. Also read [SEBI-ASBA] Lets Learn the Concept.

Please refer to circular SEBI / IMD / Cir / No 18 / 198647 / 2010 dated March 15, 2010 regarding additional mode of payments through ASBA in Mutual Funds. The circular indicated that the Mutual Funds/AMCs have to compulsorily provide ASBA facility to the investors for all NFOs launched on or after July 01, 2010.

In partial modification of the above circular, it has been decided that Mutual Funds / AMCs shall provide ASBA facility to investors for all NFOs launched on or after October 1, 2010.

 

Source: Cir / IMD / DF / 6 / 2010 dated 28th July 2010

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